1
00:00:00,080 --> 00:00:02,680
If it can be built and ramped 
up, yeah, everyone can get paid.

2
00:00:02,680 --> 00:00:04,200
It's great. 
You have, you know, CapEx 

3
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blowout management team can't 
deliver, you don't get the 

4
00:00:06,760 --> 00:00:09,800
commodity price tailwinds you 
were expecting and all blow up 

5
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pretty quickly. 
Fraser welcome mate, how are 

6
00:00:15,360 --> 00:00:16,520
you? 
Hi, guys. 

7
00:00:16,520 --> 00:00:17,320
I'm good. 
Thanks. 

8
00:00:17,320 --> 00:00:20,600
Fraser Perry JD is our guest 
joining us on Mike today. 

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00:00:20,600 --> 00:00:24,440
Fraser is well to start off with
you, just a great bloke. 

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I've talked to you. 
You give us so much energy. 

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Like some of the books on his 
bookshelf were kindly donated to

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00:00:29,040 --> 00:00:29,960
you. 
But that's not your biggest 

13
00:00:29,960 --> 00:00:33,800
credential. 
You've come out of just a career

14
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in private equity, a mining 
engineer. 

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These days you're working in 
corporate development at A, at a

16
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growing miner, ASX miner. 
What we're going to talk about 

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00:00:42,680 --> 00:00:46,920
today is the role that private 
equity plays in the mining 

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sector, financing mines into 
development. 

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The, the ways of private equity 
or that pool of capital is 

20
00:00:52,360 --> 00:00:55,760
changing over time. 
The, the challenges that the, 

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the model has and the 
opportunities that presents the,

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the, the incentives along that 
we're going to kind of open the 

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curtain on what's been a bit of 
a mysterious pool of capital to 

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00:01:04,879 --> 00:01:07,480
ask to our listeners. 
And we're delighted to have your

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your expertise kind of peeling 
back the curtain on some of 

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these big topics. 
Fantastic. 

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00:01:11,640 --> 00:01:16,080
Yeah, pleasure to be here, guys.
Private equity was a black box 

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00:01:16,080 --> 00:01:21,040
to me Yeah, before I, I joined 
my last role, which was at RCF 

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00:01:21,040 --> 00:01:24,240
Resource Capital funds. 
I remember, you know, working as

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00:01:24,240 --> 00:01:27,120
a mining engineer, applying for 
this job with RCF, I'd seen on 

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LinkedIn and thinking what is 
private equity? 

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Trying to Google what they, what
they even do, what the structure

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00:01:32,760 --> 00:01:35,000
is. 
So thankfully, you've learned a 

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huge amount of how it operates 
and how mining private equity 

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00:01:37,960 --> 00:01:40,400
funds are set up. 
But yeah, there is very little 

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information you can sort of 
glean, you know, publicly. 

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00:01:44,320 --> 00:01:47,560
So happy to share what I can 
from my experience on the 

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inside. 
It's a big. 

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00:01:49,760 --> 00:01:52,920
It's a big player in, in our 
market and it's an even bigger 

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00:01:52,920 --> 00:01:55,040
player in, in global investment 
markets. 

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00:01:55,040 --> 00:01:58,720
It gets huge capital allocations
from endowments specifically in 

42
00:01:58,720 --> 00:02:00,880
the US. 
But I'm super keen to unpack it 

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00:02:00,880 --> 00:02:03,840
because we obviously speak with 
heaps of investors on this show,

44
00:02:03,960 --> 00:02:06,000
but we never speak with private 
equity investors because they're

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00:02:06,000 --> 00:02:07,960
a bit coy, they're a bit shy, 
they're. 

46
00:02:08,440 --> 00:02:11,360
Not allowed to because the money
comes from US pension funds and 

47
00:02:11,360 --> 00:02:14,560
they're bound by all these SEC 
restriction restrictions and so.

48
00:02:14,600 --> 00:02:16,600
RCF no different. 
RCF no different. 

49
00:02:16,600 --> 00:02:19,480
Yeah, we never, we, I don't 
think we've ever had a private 

50
00:02:19,480 --> 00:02:22,040
equity group that has said, yes,
you can voice my comments. 

51
00:02:22,040 --> 00:02:25,240
Yeah, it just doesn't happen. 
I think you spot on, but we need

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00:02:25,240 --> 00:02:28,800
to pull back the curtain because
they are still very present in 

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00:02:28,800 --> 00:02:30,840
our space. 
We have spoken so much about 

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00:02:30,840 --> 00:02:32,800
like recent deals, you know, 
Quintero's one that comes to 

55
00:02:32,800 --> 00:02:36,240
mind, great bit of action then 
going at it for, for New World. 

56
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So we're, we're really excited 
to, to peel back the, the 

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curtain, understand what you 
learnt on the way, how your 

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00:02:42,200 --> 00:02:44,760
thoughts after the fact change 
from what you thought you were, 

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00:02:45,160 --> 00:02:47,880
you were jumping into. 
And I think for a lot of punters

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00:02:47,880 --> 00:02:50,880
out there, just understand the 
the role that they play, the 

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return expectations that people 
have and what the industry is 

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00:02:54,960 --> 00:02:57,960
going to look like in in five 
years, in 10 years and beyond 

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00:02:57,960 --> 00:03:01,320
that. 
You know, and in a, like a, a 

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00:03:01,400 --> 00:03:05,040
theoretical sense, like the 
model should should work well 

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00:03:05,040 --> 00:03:08,640
because you're marrying patient 
capital with a, with a, with a 

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00:03:08,680 --> 00:03:11,360
cyclical kind of uplift, like 
there's a cyclical nature to 

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commodities businesses. 
So like in theory, there's a lot

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of merit to this, this, this 
model. 

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00:03:16,000 --> 00:03:19,520
The actual empirical data of 
returns from private equity 

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asset class in mining, however, 
has been on balance pretty, 

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00:03:24,000 --> 00:03:26,640
pretty, pretty below average. 
Would you agree with that? 

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00:03:27,520 --> 00:03:30,800
Yeah, look, pretty mixed history
and perhaps we'll get to that. 

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00:03:30,880 --> 00:03:34,040
You know, performers as we, you 
know, the conversation evolves. 

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00:03:34,040 --> 00:03:36,200
Perhaps a good spot to start is 
probably the structure. 

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00:03:36,840 --> 00:03:39,720
So, you know, you've had lots of
great guests come in, you know, 

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fund managers, managers, you 
know, long, long only or long 

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00:03:42,880 --> 00:03:45,600
short public equity funds, 
private equity funds set up 

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00:03:45,600 --> 00:03:49,720
quite different differently. 
You know those funds, you know, 

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00:03:49,720 --> 00:03:52,680
closed end funds, yeah, they 
have typically a 10 year 

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00:03:52,680 --> 00:03:57,240
lifespan where the fund manager 
goes out to, you know, 

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00:03:57,360 --> 00:03:59,840
prospective investors who are 
the limited partners. 

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00:04:00,240 --> 00:04:02,960
Yeah, they ask for capital 
commitments and that is 

83
00:04:02,960 --> 00:04:06,400
effectively raising the fund. 
Once the funds raise, they have,

84
00:04:06,480 --> 00:04:08,280
you know, a short amount of time
to deploy. 

85
00:04:08,280 --> 00:04:10,960
It's typically, you know, first 
five years of that 10 year fund 

86
00:04:11,560 --> 00:04:14,680
and then they have to distribute
the capital back to the 

87
00:04:14,680 --> 00:04:17,880
investors on the back half of 
the fund there as well. 

88
00:04:18,399 --> 00:04:21,800
The investors in the fund will 
pay, you know, fees for that 

89
00:04:22,120 --> 00:04:23,560
privilege to be part of that 
fund. 

90
00:04:23,560 --> 00:04:26,800
So there's a management fee, you
know, paid, you know, to the 

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00:04:26,800 --> 00:04:28,600
fund manager. 
And there's also a performance 

92
00:04:28,600 --> 00:04:30,080
fee. 
You know, if the fund can 

93
00:04:30,080 --> 00:04:33,920
perform above a hurdle rate, you
know, they'll pay a performance 

94
00:04:33,920 --> 00:04:37,600
fee to the fund manager as well.
So it's this fixed time frame 

95
00:04:37,600 --> 00:04:40,160
that probably creates most of 
the constraints and where it's, 

96
00:04:40,280 --> 00:04:43,840
you know, most different to, to 
other funds that, you know, can 

97
00:04:43,840 --> 00:04:46,800
go in and out of things all the 
time, can recycle capital all 

98
00:04:46,800 --> 00:04:49,280
the time. 
If you have a private equity 

99
00:04:49,280 --> 00:04:51,640
fund, you know, they're 
typically, you know, 5 to 10 

100
00:04:51,640 --> 00:04:55,280
very concentrated investments in
that fund, you know, within 10 

101
00:04:55,280 --> 00:04:58,760
years of the life of that fund. 
You know, finding opportunities 

102
00:04:58,760 --> 00:05:01,280
can take a few years. 
Executing on the deals can take 

103
00:05:01,280 --> 00:05:03,440
a few years. 
You know, seeing the value 

104
00:05:03,440 --> 00:05:06,400
creation and those investments 
you know grow and mature, it can

105
00:05:06,400 --> 00:05:09,880
take more than a few years and 
then finding an exit and getting

106
00:05:09,880 --> 00:05:11,320
liquidity can take a few years 
too. 

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00:05:11,320 --> 00:05:15,080
So it's really hard to get 
everything done timing wise, you

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00:05:15,080 --> 00:05:19,560
know in that 10 year period and 
especially so in mining in 

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commodity markets which are 
really volatile. 

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You know to get one, you know, 
to come in at the bottom of the 

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00:05:24,760 --> 00:05:27,800
cycle and then get your timing 
right to exit at the top of that

112
00:05:27,800 --> 00:05:31,040
cycle and time it perfectly in 
that 10 year period is really 

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00:05:31,040 --> 00:05:33,360
hard. 
Yeah, I I couldn't agree more. 

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Private equity used to be called
leveraged buyouts and it sort of

115
00:05:37,000 --> 00:05:39,920
evolved and and changed names. 
But the concept came from having

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00:05:39,920 --> 00:05:43,120
a small bit of equity, borrowing
a lot of money, taking a company

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00:05:43,120 --> 00:05:48,200
private, optimizing how it kind 
of runs, operates, you know, 

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00:05:48,400 --> 00:05:51,000
think of an industrial type 
business and then sell it back 

119
00:05:51,000 --> 00:05:53,080
out, IPO it. 
But the the model has changed 

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00:05:53,080 --> 00:05:55,560
massively. 
And when we look at private 

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00:05:55,560 --> 00:05:58,840
equity companies in the mining 
space, they don't all have the 

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00:05:58,840 --> 00:06:01,480
same strategy. 
Can you share a bit of detail on

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00:06:01,480 --> 00:06:03,360
on what you've kind of picked up
on the on the various types of 

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00:06:03,560 --> 00:06:05,320
strategies that these PE groups 
have? 

125
00:06:05,440 --> 00:06:07,760
Look, fundamentally, what are 
these private equity funds 

126
00:06:07,760 --> 00:06:09,960
trying to do? 
Well, like everyone on on the 

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00:06:09,960 --> 00:06:11,400
buy side, they're trying to make
money. 

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00:06:12,520 --> 00:06:15,320
The target returns for these 
funds are typically that, you 

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00:06:15,320 --> 00:06:18,680
know, two to three times 
multiple on invested capital. 

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00:06:19,120 --> 00:06:22,920
Private equity likes to talk 
talk in multiples, you know, 

131
00:06:22,920 --> 00:06:26,560
less so IRR that you know, 
public equity markets talk 

132
00:06:26,560 --> 00:06:28,080
about. 
And that's probably because you 

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00:06:28,080 --> 00:06:30,600
know, it's typically in private 
markets, it's a long period of 

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00:06:30,600 --> 00:06:32,920
time. 
The investors that that come 

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00:06:32,920 --> 00:06:36,080
into private equity allocate 
into this asset class are 

136
00:06:36,320 --> 00:06:38,920
thinking of it slightly 
different to, you know, people 

137
00:06:38,920 --> 00:06:41,520
that are trading on a lot more 
regular basis. 

138
00:06:41,520 --> 00:06:43,880
So. 
But it invests the time frame. 

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00:06:44,000 --> 00:06:47,880
That that, that is measured from
the time that the the capital is

140
00:06:48,360 --> 00:06:50,880
deployed. 
So let's say you a fund they 

141
00:06:50,880 --> 00:06:54,040
raise a billion dollars, right 
and they've got five years to 

142
00:06:54,040 --> 00:06:56,840
deploy that billion dollars and 
they're incrementally doing that

143
00:06:56,840 --> 00:06:58,560
with different opportunities 
that come up. 

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00:06:58,960 --> 00:07:01,360
Each one of those, like the 
multiple invested capital, is 

145
00:07:01,360 --> 00:07:03,200
sort of measured from the point 
in time of which. 

146
00:07:03,200 --> 00:07:06,160
There's lots of ways to cut it, 
right, Lots of ways to cut it. 

147
00:07:06,160 --> 00:07:09,960
So in private equity, you 
typically hear, you know, funds 

148
00:07:10,040 --> 00:07:13,200
or, or managers, Yeah, the fund 
managers, core managers, the 

149
00:07:13,200 --> 00:07:17,040
GPS, you know, talk about things
in terms of gross and net. 

150
00:07:17,440 --> 00:07:22,480
So, yeah, the gross multiple is 
the multiple from the day you 

151
00:07:22,480 --> 00:07:25,280
make a capital call to your 
LP's. 

152
00:07:25,600 --> 00:07:28,680
So you've found this great deal,
you've got a term sheet that's 

153
00:07:28,880 --> 00:07:31,160
ready to go. 
You'll make a capital call to 

154
00:07:31,160 --> 00:07:33,400
your LP's so that you can fund 
the deal. 

155
00:07:33,920 --> 00:07:38,240
The day that capital comes in, 
that capital starts accruing A 

156
00:07:38,240 --> 00:07:40,880
preferred return that the fund 
manager is going to have to be 

157
00:07:41,280 --> 00:07:43,960
at the end, and that's the day 
these multiples start ticking 

158
00:07:43,960 --> 00:07:45,320
is. 
That the same day they start 

159
00:07:45,520 --> 00:07:48,280
also earning a fee. 
That's right. 

160
00:07:48,280 --> 00:07:51,760
So the fund manager deployed 
funds can start clipping a fee 

161
00:07:51,760 --> 00:07:56,920
there to manage that AUM there. 
So as time goes by, eventually 

162
00:07:57,080 --> 00:08:01,520
get towards the exit again, you 
sell the business, you're 

163
00:08:01,520 --> 00:08:02,880
waiting for the capital to come 
in. 

164
00:08:02,880 --> 00:08:04,680
The capital finally comes back 
into the fund. 

165
00:08:05,000 --> 00:08:08,520
The fund can perhaps recycle a 
little bit or it can distribute 

166
00:08:08,520 --> 00:08:12,760
it back to the LP. 
The day it comes back in, you 

167
00:08:12,760 --> 00:08:16,720
crystallize that investment and 
you can see what the gross 

168
00:08:16,720 --> 00:08:20,240
multiple is there. 
The net multiple takes out all 

169
00:08:20,240 --> 00:08:22,320
the fees there that the fund 
manager clips. 

170
00:08:22,320 --> 00:08:25,040
So you know that management fee 
that was, you know, taken along 

171
00:08:25,040 --> 00:08:27,840
the way, perhaps its diligence 
costs and things like that. 

172
00:08:27,840 --> 00:08:31,280
So you'll see a spread between 
the gross multiple and the net 

173
00:08:31,280 --> 00:08:32,640
multiple. 
What's the typical spread 

174
00:08:32,640 --> 00:08:36,360
between the two? 
Depends how far you are along in

175
00:08:36,360 --> 00:08:39,960
in the fund life, you know how 
far that preferred returns 

176
00:08:39,960 --> 00:08:42,240
accrued. 
But yeah, probably like 20% 

177
00:08:42,240 --> 00:08:44,560
difference. 
And just quickly for people 

178
00:08:44,560 --> 00:08:47,080
listening, you've got the GPS 
who are the ones that manage the

179
00:08:47,080 --> 00:08:49,520
money, they invest the capital. 
The general partner. 

180
00:08:49,520 --> 00:08:51,960
The fund manager. 
And then the LP's are the ones 

181
00:08:51,960 --> 00:08:55,360
that give their money to the 
fund, most often the endowments.

182
00:08:55,400 --> 00:08:56,920
Yep. 
The commit, the commitment. 

183
00:08:57,200 --> 00:08:58,760
Yep. 
So the limit partner makes this 

184
00:08:58,760 --> 00:09:00,800
commitment. 
And you know, limited partners, 

185
00:09:00,840 --> 00:09:03,880
yeah, we'll get to that. 
That's changing who they are. 

186
00:09:03,880 --> 00:09:07,320
But typically your pension 
funds, endowment funds, et 

187
00:09:07,320 --> 00:09:10,520
cetera, those, those sorts of 
groups that, you know, within 

188
00:09:10,520 --> 00:09:12,960
their portfolio, they're 
allocating to real assets. 

189
00:09:13,000 --> 00:09:16,920
You know, sometimes there's a 
specific bucket for, you know, 

190
00:09:17,360 --> 00:09:19,800
alternative alternative assets 
and you know, there's a private 

191
00:09:19,800 --> 00:09:21,920
equity bucket. 
But typically for mining PE 

192
00:09:21,920 --> 00:09:23,920
funds, they're sitting in the 
real assets bucket. 

193
00:09:23,920 --> 00:09:26,200
You know, where there's, you 
know, there might be investments

194
00:09:26,200 --> 00:09:29,960
in, in, you know, other PE funds
that do infrastructure or just, 

195
00:09:30,000 --> 00:09:32,480
you know, direct investment into
some infrastructure projects as 

196
00:09:32,480 --> 00:09:35,200
well and things like that. 
For those LP's, those like 

197
00:09:35,200 --> 00:09:37,520
endowment funds, is the actual 
model, like private equity model

198
00:09:37,520 --> 00:09:40,880
just a very familiar model and 
they have like a, you know, a 

199
00:09:40,880 --> 00:09:44,440
kind of a regimented 
understanding of like the 

200
00:09:44,440 --> 00:09:46,720
private equity model and then 
they're just porting that over 

201
00:09:46,720 --> 00:09:49,080
to to mining sort of expecting 
similar. 

202
00:09:49,240 --> 00:09:52,400
Yeah, remember, I mean, PE has 
been around generous PEA for a 

203
00:09:52,400 --> 00:09:53,960
long time, you know, multiple 
decades. 

204
00:09:53,960 --> 00:09:55,520
Mining PE is probably a newer 
thing. 

205
00:09:55,880 --> 00:09:59,760
You know, there's in, in 
ballpark numbers, sort of, you 

206
00:09:59,760 --> 00:10:04,200
know, 15,000 or so, you know, PE
funds that you know, aren't 

207
00:10:04,200 --> 00:10:06,520
fully closed, you know, they're 
still still out there, right? 

208
00:10:06,840 --> 00:10:10,080
I would say, you know, mining's 
probably 40-50 of those. 

209
00:10:10,800 --> 00:10:13,720
And how do you call it mining? 
Some do, you know, oil and gas 

210
00:10:13,720 --> 00:10:16,120
and a little bit of mining. 
Some are generalist with like 1 

211
00:10:16,120 --> 00:10:17,840
mining investment in the whole 
portfolio. 

212
00:10:17,840 --> 00:10:20,640
So depending how you cut it, 
maybe there's a few hundred that

213
00:10:20,840 --> 00:10:23,560
would ultimately do an 
investment in natural resources.

214
00:10:23,560 --> 00:10:27,240
But mining PE is still such a 
very small part of the whole PE 

215
00:10:27,240 --> 00:10:29,320
landscape. 
So for these asset managers, 

216
00:10:29,320 --> 00:10:34,080
yes, it's a very familiar your 
business model and asset class 

217
00:10:34,080 --> 00:10:36,680
for them. 
Yeah, mining PE is something 

218
00:10:36,680 --> 00:10:40,160
that's probably more unusual. 
Can we talk about the, the, the 

219
00:10:40,200 --> 00:10:43,040
theory of making money in 
private equity in mining? 

220
00:10:43,040 --> 00:10:45,480
Is it as simple as like I'm 
going to buy something at a 

221
00:10:45,480 --> 00:10:49,400
discount to NAV and then like 
that, that asset is going to get

222
00:10:49,400 --> 00:10:52,480
developed over time and and I'll
be able to sell it at A at a 

223
00:10:52,480 --> 00:10:55,280
lower discount than have or, or 
is it about turnarounds? 

224
00:10:55,280 --> 00:10:57,680
Is it, is it a bunch of above? 
Is it counter cyclical? 

225
00:10:57,680 --> 00:11:00,280
Lots of different strategies so 
that you got that target return 

226
00:11:00,280 --> 00:11:03,880
of you know two to three times, 
yeah, your money. 

227
00:11:04,120 --> 00:11:07,640
So get two to three times 
ideally, you know a net Moik 

228
00:11:07,960 --> 00:11:11,640
multiple invested capital. 
How do you get a get a 2X? 

229
00:11:11,640 --> 00:11:14,280
Well, couple of different ways 
to do it. 

230
00:11:14,880 --> 00:11:18,480
The traditional private equity 
model likes to talk about deals 

231
00:11:18,480 --> 00:11:20,600
in terms of, you know, growth 
value. 

232
00:11:21,760 --> 00:11:26,560
Yeah, the growth model, which is
typically in mining is building 

233
00:11:26,560 --> 00:11:29,400
a project, you know, projects 
that sit in that development. 

234
00:11:29,400 --> 00:11:32,320
Sage, you know, the Lausanne 
curve just like your logo here, 

235
00:11:32,320 --> 00:11:34,600
things have a deep discount. 
You know, we're in that 

236
00:11:34,600 --> 00:11:37,160
development phase. 
And then as they de risk taken 

237
00:11:37,160 --> 00:11:40,280
through construction, successful
ramp up, after that we'll get a 

238
00:11:40,280 --> 00:11:43,440
rewrite. 
You know, depends at which 

239
00:11:43,440 --> 00:11:45,280
commodity, which point in time, 
which stage you're at. 

240
00:11:45,280 --> 00:11:48,080
But generally, you know, 
development stage project, you 

241
00:11:48,080 --> 00:11:51,520
know, with a study sitting at, 
you know, .5 NAV, build the 

242
00:11:51,520 --> 00:11:54,720
thing successfully ramp it up. 
It should be close to a one 

243
00:11:54,720 --> 00:11:57,080
times NAV. 
Now you know, that can change 

244
00:11:57,080 --> 00:11:59,400
all the time. 
But in principle, you know, 

245
00:11:59,400 --> 00:12:01,800
that's how you get your 2X 
return, you know, provide some 

246
00:12:01,800 --> 00:12:05,240
capital to a development stage 
project to allow it to be built.

247
00:12:05,360 --> 00:12:07,600
You know, oversee the 
construction and the ramp up and

248
00:12:07,600 --> 00:12:10,480
then and then sell it on the 
other side and then you get your

249
00:12:10,480 --> 00:12:12,400
2X. 
That's your typical growth 

250
00:12:12,400 --> 00:12:15,160
strategy and that's I would say 
a hard strategy to execute on. 

251
00:12:15,520 --> 00:12:17,600
You know, there's lots of things
that can go wrong through 

252
00:12:17,600 --> 00:12:20,960
construction ramp up. 
We can get to that later, but 

253
00:12:20,960 --> 00:12:24,040
it's a pretty hard strategy. 
Other strategies, I think you 

254
00:12:24,040 --> 00:12:27,040
could broadly turn them sort of 
value strategies. 

255
00:12:27,920 --> 00:12:30,200
So that could be a turn around 
opportunity. 

256
00:12:30,360 --> 00:12:33,040
Yeah, that could be an operating
asset, you know that's in the 

257
00:12:33,040 --> 00:12:35,840
4th quartile and it's struggling
and you know you need to change 

258
00:12:35,840 --> 00:12:38,400
management and you need to 
change operating practices and 

259
00:12:38,400 --> 00:12:41,400
you can turn it around and you 
know change, change the cash 

260
00:12:41,400 --> 00:12:46,240
flow significantly there and 
then flip it that that can work.

261
00:12:46,920 --> 00:12:50,480
There's a consolidation strategy
where you know, there's M&A to 

262
00:12:50,480 --> 00:12:54,080
do, you know, we've got perhaps 
stranded, you know, mining 

263
00:12:54,080 --> 00:12:55,960
assets without a processing 
solution. 

264
00:12:56,400 --> 00:13:00,080
Great example, there was sort of
Genesis acquiring lean or assets

265
00:13:00,080 --> 00:13:02,720
from Saint Barbara. 
You know Genesis had Ulysses 

266
00:13:02,720 --> 00:13:04,400
project at that time. 
Yes, St. 

267
00:13:04,400 --> 00:13:07,040
Barbara had Gwalia process plan 
as well as Gwalia mine. 

268
00:13:07,320 --> 00:13:09,720
Yeah, some very logical 
synergies there, you know, 

269
00:13:09,760 --> 00:13:12,880
putting the ore in a mill, 
something as simple as that. 

270
00:13:12,880 --> 00:13:16,200
Or it can be more broader, you 
know, roll up strategy across a 

271
00:13:16,200 --> 00:13:19,720
whole region where there's a lot
of subscale deposits that 

272
00:13:19,720 --> 00:13:22,440
collectively could run a hop and
spoke strategy and get it to 

273
00:13:22,440 --> 00:13:24,880
achieve critical scale, things 
like that. 

274
00:13:24,880 --> 00:13:28,320
So that's the, you know, 
consolidation strategy there or 

275
00:13:28,320 --> 00:13:31,920
roll up strategy that's called 
in generalist PA or bolt on. 

276
00:13:32,560 --> 00:13:34,840
But you know, I've seen that 
work quite a few times. 

277
00:13:36,440 --> 00:13:40,800
And I guess there's also the the
Special Situations, you know, 

278
00:13:40,800 --> 00:13:44,160
that are quite nuanced and 
they're all situations specific.

279
00:13:45,560 --> 00:13:48,200
Those ones are probably harder 
to plan a fund around in terms 

280
00:13:48,200 --> 00:13:50,800
of, you know, we're going to do 
so many of these types of deals 

281
00:13:50,800 --> 00:13:53,800
they they come up. 
But yeah, all of the different 

282
00:13:53,800 --> 00:13:56,440
fund managers will be thinking 
about this in a certain way. 

283
00:13:56,440 --> 00:13:59,040
Some are thinking, yes, we're 
going to focus large, you know, 

284
00:13:59,040 --> 00:14:02,400
a portfolio largely on building 
projects, provide that 

285
00:14:02,400 --> 00:14:05,760
construction financing. 
Some others, you know, just 

286
00:14:05,760 --> 00:14:08,640
focusing on, you know, 
development stage assets, you 

287
00:14:08,640 --> 00:14:12,040
know, de risking them, you know,
with more technical work and 

288
00:14:12,040 --> 00:14:14,880
then ultimately finding an exit 
there too. 

289
00:14:14,880 --> 00:14:18,280
So lots of different ways to 
still get your two to 3X. 

290
00:14:18,320 --> 00:14:23,480
So one of the other ones we've 
seen, Fraser, is what Tembo have

291
00:14:23,480 --> 00:14:26,440
done a few times and that's 
minority stakes and that that's 

292
00:14:26,440 --> 00:14:29,080
a real point of difference 
versus traditional PE. 

293
00:14:29,080 --> 00:14:31,080
They're not buying the company 
outright. 

294
00:14:31,480 --> 00:14:35,800
They're taking a, call it maybe 
a 20% stake in a, in a public 

295
00:14:35,800 --> 00:14:36,400
company. 
What? 

296
00:14:36,600 --> 00:14:37,600
What do you kind of think of 
this? 

297
00:14:37,640 --> 00:14:40,120
Point come to mind, yeah. 
Orks point another one. 

298
00:14:41,200 --> 00:14:44,760
This strikes me as a bit more of
a a more recent revelation. 

299
00:14:44,840 --> 00:14:45,600
Equity. 
Yeah. 

300
00:14:45,600 --> 00:14:50,080
So how do you kind of connect 
those dots and think of them in 

301
00:14:50,080 --> 00:14:52,160
in the PE context? 
Sure. 

302
00:14:52,360 --> 00:14:55,440
Yeah. 
And that and the strategies can 

303
00:14:55,440 --> 00:14:58,600
can be right into the spectrum. 
So for example, yeah, some of 

304
00:14:58,600 --> 00:15:01,640
those investments I'm familiar 
with that Tembo's made are 

305
00:15:01,640 --> 00:15:05,160
probably more like a, you know, 
public long equity fund, right? 

306
00:15:06,080 --> 00:15:08,600
Yeah, they're minority. 
They're enlisted vehicles. 

307
00:15:08,600 --> 00:15:11,520
They're pretty liquid as well. 
They might not necessarily have 

308
00:15:11,520 --> 00:15:14,760
a lot of, you know, influence 
and control in the investment as

309
00:15:14,760 --> 00:15:18,400
well. 
The the challenge is for the 

310
00:15:18,400 --> 00:15:20,840
fund manager when they're 
raising these, you know, funds, 

311
00:15:20,920 --> 00:15:24,040
you know, their pitch to LP's 
is, you know, their value add. 

312
00:15:24,040 --> 00:15:26,240
And typically that's going to 
have a degree of sort of 

313
00:15:26,240 --> 00:15:28,680
influence and control in their 
investments. 

314
00:15:28,680 --> 00:15:30,400
You know, they're not passive 
investors. 

315
00:15:30,400 --> 00:15:33,440
They're, you know, active 
investors that want to be, you 

316
00:15:33,440 --> 00:15:37,080
know, on the board inside the 
business and having a seat at 

317
00:15:37,080 --> 00:15:40,120
the table on a lot operational 
strategic decisions. 

318
00:15:40,120 --> 00:15:42,640
So yeah, there's, there's a huge
spectrum. 

319
00:15:42,640 --> 00:15:45,520
Perhaps we can sort of talk 
through the mandate of these 

320
00:15:45,520 --> 00:15:49,360
funds and you'll get a sense for
how you know they're different 

321
00:15:49,360 --> 00:15:52,080
in terms of the strategies and 
and where they allocate to. 

322
00:15:52,080 --> 00:15:54,560
What are the what are these? 
It's the mandates. 

323
00:15:54,560 --> 00:15:57,040
Like just put the when when you 
go out and raise a fund, here's 

324
00:15:57,040 --> 00:15:59,400
the mandate. 
Or do the L, the L, the LP's 

325
00:15:59,400 --> 00:16:02,040
themselves actually have like, 
you know, you've got to follow 

326
00:16:02,040 --> 00:16:04,480
these certain criteria in order 
to raise the money in the 1st 

327
00:16:04,480 --> 00:16:06,000
place? 
Like who dictates this mandate? 

328
00:16:06,680 --> 00:16:09,400
The fund manager, when they're 
going to raise the fund, this is

329
00:16:09,400 --> 00:16:11,200
the mandate for that specific 
fund. 

330
00:16:12,560 --> 00:16:15,240
Some managers might have 
multiple funds in the market, 

331
00:16:15,640 --> 00:16:18,400
you know, different strategies 
like a private credit strategy 

332
00:16:18,400 --> 00:16:21,200
and a private equity strategy. 
So they'll, you know, be very 

333
00:16:21,200 --> 00:16:23,760
explicit in these documents as 
to what they're going to go 

334
00:16:23,760 --> 00:16:24,600
after. 
They can and can't do. 

335
00:16:24,840 --> 00:16:26,200
Yeah. 
So capital position in the 

336
00:16:26,200 --> 00:16:27,720
capital structure is a great 
one. 

337
00:16:27,720 --> 00:16:29,560
Yeah. 
Is it going to be focused on 

338
00:16:29,560 --> 00:16:33,760
debt and have security there? 
Is it going to be subordinated 

339
00:16:33,760 --> 00:16:37,240
in the capital structure or is 
it going to be equity as well? 

340
00:16:37,880 --> 00:16:40,480
Or maybe, you know, there's 
going to be a portfolio approach

341
00:16:40,480 --> 00:16:43,960
where, yeah, 1/3 of, you know, 
the fund might be this and that 

342
00:16:43,960 --> 00:16:45,880
the other. 
But that's probably the biggest 

343
00:16:45,880 --> 00:16:48,080
point difference is, you know, 
where they are going to be in 

344
00:16:48,080 --> 00:16:51,880
the capital structure. 
You know, groups like Orion, 

345
00:16:51,880 --> 00:16:54,960
particularly in their, you know,
mine finance fund, which is the 

346
00:16:54,960 --> 00:16:57,360
traditional sort of, yeah, 
private equity fund. 

347
00:16:57,640 --> 00:16:59,920
Yeah, they're typically 
financing projects in the 

348
00:16:59,920 --> 00:17:03,040
construction phase and it's 
typically debt at that point. 

349
00:17:03,240 --> 00:17:05,839
Yes, there are some nice 
management teams that like and 

350
00:17:05,839 --> 00:17:07,800
they'll go do an equity 
investment for part of that 

351
00:17:07,800 --> 00:17:09,040
fund. 
But, you know, the fund is 

352
00:17:09,040 --> 00:17:12,240
largely focused on on debt. 
And if they can get a royalty on

353
00:17:12,240 --> 00:17:14,240
the back end, happy days too. 
Yeah. 

354
00:17:14,400 --> 00:17:16,880
And and look, they're still 
targeting similar returns, 

355
00:17:16,880 --> 00:17:19,359
right? 
There's debt style returns and 

356
00:17:19,359 --> 00:17:21,920
equity style returns, but you 
know, these debt style returns 

357
00:17:21,920 --> 00:17:23,760
are pretty close to equity style
returns. 

358
00:17:23,760 --> 00:17:28,280
You're still targeting a 2X, you
know IRS that are in the, you 

359
00:17:28,280 --> 00:17:30,520
know, double digits as well, 
right? 

360
00:17:30,680 --> 00:17:32,760
Well. 
You know, in project finance 

361
00:17:32,800 --> 00:17:35,920
like generally you're, you're 
taking equity like risk because 

362
00:17:35,920 --> 00:17:38,240
if the mind doesn't work then. 
Yeah, it can. 

363
00:17:38,240 --> 00:17:41,040
Be it can be a pretty bad case 
for the, for the, for the debt. 

364
00:17:41,040 --> 00:17:43,680
I'm saying lots of these, you 
know, very exotic structured 

365
00:17:43,680 --> 00:17:46,480
term sheets for sort of 
preferred equity. 

366
00:17:47,440 --> 00:17:51,240
And yeah, lots of bells and 
whistles on these term sheets, 

367
00:17:51,240 --> 00:17:53,040
but effectively it's a binary 
outcome, right? 

368
00:17:53,680 --> 00:17:57,680
You know, if it can be built and
and ramped up, yeah, everyone 

369
00:17:57,680 --> 00:18:00,680
can get paid, it's great. 
But you know, if you have, you 

370
00:18:00,680 --> 00:18:03,480
know, CapEx blowout, management 
team can't deliver, you don't 

371
00:18:03,480 --> 00:18:06,200
get the commodity price 
tailwinds you were expecting, 

372
00:18:06,680 --> 00:18:08,440
Yeah, it can all blow up pretty 
quickly. 

373
00:18:08,440 --> 00:18:13,400
So I think it's a full sense of 
security depending on, you know,

374
00:18:13,760 --> 00:18:16,120
having this position in the cap 
structure. 

375
00:18:16,160 --> 00:18:19,040
You know, there's, there's a lot
of examples of, you know, 

376
00:18:19,040 --> 00:18:21,320
projects have been financed by 
private equity that have been 

377
00:18:21,360 --> 00:18:26,000
refinanced, you know, straight 
after construction or, or, or or

378
00:18:26,000 --> 00:18:29,880
even later as well. 
So yeah, capital structure is a 

379
00:18:29,880 --> 00:18:32,040
big one. 
Jurisdiction I think is also a 

380
00:18:32,040 --> 00:18:34,560
good one to talk about. 
You know, you talked about Tembo

381
00:18:34,560 --> 00:18:38,560
and investments here in 
Australia with you know, Spartan

382
00:18:38,560 --> 00:18:40,840
Greatland and others. 
You know, they're, they're 

383
00:18:40,840 --> 00:18:45,080
groups that will solely focus 
on, you know, Western mining 

384
00:18:45,200 --> 00:18:48,400
friendly supportive 
jurisdictions like Australia, 

385
00:18:48,400 --> 00:18:51,080
Canada, US. 
Cantera is a good example that 

386
00:18:51,480 --> 00:18:55,400
exclusively focused on those 
places versus other groups that 

387
00:18:55,760 --> 00:18:59,760
will have a bigger risk appetite
to go in more difficult 

388
00:18:59,760 --> 00:19:02,440
jurisdictions. 
You know, to speak to some of 

389
00:19:02,440 --> 00:19:05,400
the examples from RCF's 
portfolio in the PE fund, I 

390
00:19:05,440 --> 00:19:08,400
mean, they're built, you know, 
the RG Gold project in 

391
00:19:08,400 --> 00:19:12,160
Kazakhstan. 
They've been investors in Ozone,

392
00:19:12,600 --> 00:19:15,200
which is in Burkina Faso. 
So, you know, I mean, West 

393
00:19:15,200 --> 00:19:18,320
Africa to, you know, Central 
Asia complete other ends of the 

394
00:19:18,320 --> 00:19:21,560
spectrum as well. 
So, yeah, that's an important 

395
00:19:21,560 --> 00:19:23,920
point. 
And and as we get to sort of how

396
00:19:23,920 --> 00:19:26,960
pay is evolving, I do think, you
know, the the jurisdictional 

397
00:19:26,960 --> 00:19:29,040
focus is becoming quite 
important to some LP's. 

398
00:19:29,040 --> 00:19:32,280
They're very focused on, you 
know, Western supply chains and 

399
00:19:32,560 --> 00:19:35,440
being able to specifically 
allocate to that thematic as 

400
00:19:35,440 --> 00:19:36,720
well. 
We've got to talk about that 

401
00:19:36,720 --> 00:19:39,640
later because the interlock with
government these days is a huge 

402
00:19:39,640 --> 00:19:42,000
step forward that we've seen in 
some of these funds and what 

403
00:19:42,000 --> 00:19:44,760
they're doing going forward. 
But when we keep going with, 

404
00:19:44,760 --> 00:19:47,800
with the mandate, we've kind of 
talked about the stage of the 

405
00:19:47,800 --> 00:19:49,880
asset, but I think we really 
need to dive into this one. 

406
00:19:49,880 --> 00:19:52,320
And I'm, I'm curious to hear 
what you think, Fraser, about 

407
00:19:52,520 --> 00:19:55,800
how this is evolving as well. 
Because taking that risk, as we 

408
00:19:55,800 --> 00:19:58,360
kind of said for a project that 
is going to go into 

409
00:19:58,360 --> 00:20:01,680
construction, that's a huge 
amount of risk like that is a a 

410
00:20:01,880 --> 00:20:04,400
very large. 
Step to take. 

411
00:20:04,600 --> 00:20:06,760
And that's why I think we've 
seen the likes of Quintera say, 

412
00:20:06,920 --> 00:20:10,440
hey, we want to take this from 
.4 NAV to .6 NAV and and sell 

413
00:20:10,440 --> 00:20:11,800
it. 
And keep it in development stage

414
00:20:11,960 --> 00:20:14,200
pre FIA that's. 
The project, So what what are 

415
00:20:14,200 --> 00:20:17,760
the other stages of assets you, 
you see and maybe if there's a 

416
00:20:17,760 --> 00:20:20,440
few examples that come to mind 
that are that are being targeted

417
00:20:20,440 --> 00:20:21,680
out there. 
Yeah, sure. 

418
00:20:22,080 --> 00:20:24,320
Look there, there are other 
strategies that fit into this, 

419
00:20:24,320 --> 00:20:28,040
you know, broad PE box of, you 
know, taking assets as far as 

420
00:20:28,040 --> 00:20:30,880
sort of early stage expiration, 
where, again, you know, really 

421
00:20:30,880 --> 00:20:34,640
like the exploration team, their
their history and you know, the 

422
00:20:34,680 --> 00:20:37,440
the package they've put together
and you know, the targets 

423
00:20:37,440 --> 00:20:39,640
they're showing. 
So, you know, RCF had a strategy

424
00:20:39,640 --> 00:20:42,040
called the RCF opportunities 
fund that, you know, did 

425
00:20:42,040 --> 00:20:45,240
allocate to things as early as 
that and then more advanced. 

426
00:20:45,840 --> 00:20:48,760
You've then got, you know, 
strategies that focus on those 

427
00:20:48,760 --> 00:20:50,840
development stage assets, you 
know, finding things that are 

428
00:20:50,840 --> 00:20:53,040
pre study that that look 
promising that, you know, it's 

429
00:20:53,040 --> 00:20:57,000
quite simple to do a study or 
take it from say a PFS study all

430
00:20:57,000 --> 00:21:00,080
the way to FID and do a lot of 
the heavy lifting there on, you 

431
00:21:00,080 --> 00:21:05,040
know, DFS feed work. 
Getting, you know, engineering 

432
00:21:05,080 --> 00:21:07,800
companies engaged quite early 
and taking it through 

433
00:21:07,800 --> 00:21:10,560
permitting, you know, removing a
lot of the big overhangs that 

434
00:21:10,640 --> 00:21:12,760
that follow with the development
stage project. 

435
00:21:12,920 --> 00:21:15,480
And, and one of the big things 
here, right, is the signalling 

436
00:21:15,480 --> 00:21:17,680
that comes from future 
investment, because mining is 

437
00:21:17,680 --> 00:21:21,640
such a capital hungry industry 
that if you take it from A to B,

438
00:21:21,840 --> 00:21:24,000
but then say you're no longer 
going to going to fund it, what 

439
00:21:24,000 --> 00:21:25,560
is that kind of signal to the 
market? 

440
00:21:25,560 --> 00:21:28,960
So you're actually on the hook 
to to continue in in certain 

441
00:21:28,960 --> 00:21:31,600
cases the the check writing. 
Yeah. 

442
00:21:31,640 --> 00:21:35,960
Look, speaking from experience, 
I think that strategy on taking 

443
00:21:35,960 --> 00:21:38,640
things through early stage 
development to FRD is a hard 

444
00:21:38,640 --> 00:21:41,200
one. 
You're probably more reliant on,

445
00:21:41,240 --> 00:21:45,040
you know, commodity tailwinds in
general, you know, hype around 

446
00:21:45,040 --> 00:21:48,880
the commodity that that gives 
you liquidity and and drives 

447
00:21:48,880 --> 00:21:51,440
your returns there. 
You know, this is the real heavy

448
00:21:51,440 --> 00:21:54,480
lifting work that you'd 
typically see someone do it if 

449
00:21:54,600 --> 00:21:59,880
it was a pathway to building it.
Yes, it's so companies in that 

450
00:21:59,880 --> 00:22:02,920
development stage and they can 
run an equity check, the PA fund

451
00:22:02,920 --> 00:22:05,040
can run an equity check early 
that they'll fund that de 

452
00:22:05,040 --> 00:22:06,920
risking and get it to investment
decision. 

453
00:22:07,320 --> 00:22:09,720
And then they've got a seat at 
the table to be in, you know, 

454
00:22:09,720 --> 00:22:12,760
prime position to provide 
financing to construct it as 

455
00:22:12,760 --> 00:22:15,400
well. 
So I think, you know, just using

456
00:22:15,840 --> 00:22:19,160
the development stage and the 
valuation is quite an attractive

457
00:22:19,160 --> 00:22:22,640
entry point to set yourself up 
for follow on funding as it goes

458
00:22:22,640 --> 00:22:25,400
through, you know, construction 
and then start to play a little 

459
00:22:25,400 --> 00:22:27,200
bit higher across the capital 
structure. 

460
00:22:27,440 --> 00:22:29,320
You know, bring in other Co 
investors as well. 

461
00:22:29,320 --> 00:22:32,760
It's really a way of having 
somewhat, somewhat of 

462
00:22:32,880 --> 00:22:35,840
exclusivity on, yeah, the 
project financing piece, which 

463
00:22:35,840 --> 00:22:38,440
might be, you know, bigger, more
meaningful for the PE fund 

464
00:22:38,440 --> 00:22:39,600
there. 
Yeah. 

465
00:22:39,600 --> 00:22:45,000
And, and when these groups think
about diversification across the

466
00:22:45,000 --> 00:22:48,280
fund, I'm really curious to hear
your thoughts because you might 

467
00:22:48,280 --> 00:22:51,440
get some that are targeting 
critical minerals or Western 

468
00:22:51,440 --> 00:22:53,600
minerals, but the, the 
correlation between some of 

469
00:22:53,600 --> 00:22:56,560
these tends to be much higher. 
So what have you kind of learned

470
00:22:56,560 --> 00:23:02,240
from how the PE group spread 
their bets across different, you

471
00:23:02,240 --> 00:23:04,560
know, asset types against 
different commodities against 

472
00:23:04,560 --> 00:23:07,960
different jurisdictions within a
fund to make sure that they're 

473
00:23:07,960 --> 00:23:10,080
not all betting on the same one 
thing? 

474
00:23:11,160 --> 00:23:14,520
Yeah, that, I mean portfolio 
allocation and particularly how,

475
00:23:14,560 --> 00:23:16,600
you know, you think about 
commodity strategy is, is 

476
00:23:16,600 --> 00:23:19,320
absolutely critical, I think to 
having sort of, you know, a 

477
00:23:19,320 --> 00:23:23,200
fairly diversified, you know, 
portfolio and, and something 

478
00:23:23,200 --> 00:23:24,600
that can deliver through the 
cycle. 

479
00:23:24,600 --> 00:23:30,000
Look, I haven't seen any 
specific, you know, language in,

480
00:23:30,000 --> 00:23:32,400
in, in mandates and and 
strategy, but I think everyone's

481
00:23:32,400 --> 00:23:34,200
thinking the same way. 
You know, commodities that are 

482
00:23:34,200 --> 00:23:37,960
really volatile. 
Yeah, are are really hard to to 

483
00:23:37,960 --> 00:23:39,800
build, right? 
Yeah. 

484
00:23:39,840 --> 00:23:42,680
If you know, if it takes, you 
know, quite a few years to, you 

485
00:23:42,680 --> 00:23:45,720
know, finance a project, build 
it, ramp it up and you're in a 

486
00:23:45,720 --> 00:23:48,520
volatile commodity like lithium,
you know, you might miss your 

487
00:23:48,520 --> 00:23:53,360
window to exit that and and 
you're in a 10 year fund, you 

488
00:23:53,360 --> 00:23:55,440
might not have another window 
there as well. 

489
00:23:55,440 --> 00:23:59,680
So for really volatile 
commodities, you know, you think

490
00:23:59,680 --> 00:24:03,920
lithium, you know, tin and other
things like that, perhaps, you 

491
00:24:03,920 --> 00:24:06,160
know, having, you know, an 
equity strategy, you know, 

492
00:24:06,200 --> 00:24:10,960
pretty like small minority stake
in a listed vehicle might be a 

493
00:24:10,960 --> 00:24:13,360
better way to play that because 
you can go in and out quite 

494
00:24:13,360 --> 00:24:15,480
quickly. 
Yeah. 

495
00:24:15,480 --> 00:24:19,000
Look, I mean, RCF made an 
investment in Pilgrim Minerals 

496
00:24:19,000 --> 00:24:23,440
when it acquired Altura Lithium.
It's operation there that was 

497
00:24:23,440 --> 00:24:28,320
from memory seven 8% equity 
investment in a public company. 

498
00:24:28,640 --> 00:24:32,280
When lithium ran straight after 
that, in a very short amount of 

499
00:24:32,280 --> 00:24:34,840
time, it was a pretty liquid 
investment that they could exit.

500
00:24:36,000 --> 00:24:41,040
If you were to be building a new
project, say, yeah, in theory it

501
00:24:41,040 --> 00:24:43,520
was another lithium mine and he 
provided debt at the same time, 

502
00:24:43,960 --> 00:24:47,120
you know, it would have just 
started to repay that debt just 

503
00:24:47,200 --> 00:24:50,480
as lithium had created, you 
know, two years after that, and 

504
00:24:50,480 --> 00:24:53,520
you'd probably be refinancing 
that or, you know, it could 

505
00:24:53,520 --> 00:24:57,320
potentially be bankrupt as well.
So getting the strategy right 

506
00:24:57,320 --> 00:24:58,960
for the commodity is really 
important. 

507
00:25:00,480 --> 00:25:01,600
Yeah. 
We haven't touched on it all, 

508
00:25:01,600 --> 00:25:05,120
but these returns are all 
generally driven by commodity 

509
00:25:05,120 --> 00:25:07,560
price tailwinds. 
You've got to have some support 

510
00:25:07,560 --> 00:25:09,720
there from the commodity. 
And that a big piece is just, 

511
00:25:10,120 --> 00:25:12,240
you know, having a strong view 
on the fundamentals of that 

512
00:25:12,240 --> 00:25:14,600
commodity over, you know, the 
whole period, whether that's 

513
00:25:14,600 --> 00:25:17,080
sort of, you know, three to five
years that you're going to be in

514
00:25:17,080 --> 00:25:19,120
a better position there from the
commodity wise. 

515
00:25:19,120 --> 00:25:23,640
So if things like CapEx blow 
out, you know, management don't 

516
00:25:23,640 --> 00:25:26,080
work, you know, if those things 
move against you, at least 

517
00:25:26,080 --> 00:25:27,880
you've got something that might,
might. 

518
00:25:28,600 --> 00:25:30,480
So you get close to a 1X. 
Yeah. 

519
00:25:30,800 --> 00:25:32,720
And that's why I like I 
challenge the merit of a 

520
00:25:32,720 --> 00:25:35,760
diversified commodity fund. 
Like in some respects, like you 

521
00:25:35,760 --> 00:25:38,480
have a small number of 
commodities that you're bullish 

522
00:25:38,480 --> 00:25:41,720
on in that window of time. 
Like you're that's right. 

523
00:25:41,720 --> 00:25:44,240
You're not going to like if 
it's, if you're only bullish on 

524
00:25:44,240 --> 00:25:47,400
gold and copper and and call it 
and one other commodity in that 

525
00:25:47,760 --> 00:25:50,080
like in the five years you have 
to deploy it like you don't want

526
00:25:50,080 --> 00:25:52,480
to making sure you've got 
diversity of everything because 

527
00:25:52,480 --> 00:25:54,760
something it's a cyclical 
industry you're trying to ride. 

528
00:25:54,840 --> 00:25:57,480
Yeah, and and you and, and 
that's your pitch, right, You 

529
00:25:57,480 --> 00:26:00,920
know, Yeah, the fund manager in 
in this mining PE fund is a 

530
00:26:00,920 --> 00:26:03,200
specialist in this commodity. 
They've got, you know, a lot of 

531
00:26:03,200 --> 00:26:04,600
deep insight in these 
commodities. 

532
00:26:04,600 --> 00:26:07,680
So they're making very 
concentrated targeted 

533
00:26:07,720 --> 00:26:09,240
investments for these 
commodities. 

534
00:26:10,160 --> 00:26:15,400
Yeah, RCFS fund seven, yeah, 
fund in the P fund there. 

535
00:26:15,400 --> 00:26:18,680
I mean that had three major gold
investments. 

536
00:26:18,680 --> 00:26:20,640
I think, you know, would have 
been close to half their 

537
00:26:20,640 --> 00:26:23,200
portfolio would have been 
allocated to gold at one point. 

538
00:26:23,200 --> 00:26:25,480
And you know, look where the 
gold price has gone. 

539
00:26:25,480 --> 00:26:28,360
That's been a fantastic bet for 
them in that regard. 

540
00:26:29,320 --> 00:26:32,680
So you're allocating accordingly
to how strong your views are on 

541
00:26:32,680 --> 00:26:36,640
the commodities is critical. 
Some other funds, you know, do 

542
00:26:36,640 --> 00:26:39,280
like to, you know, their returns
are driven more by that rewrite 

543
00:26:39,280 --> 00:26:42,720
through construction. 
So they'll be not agnostic to 

544
00:26:42,720 --> 00:26:44,920
the commodity, but they'll 
happily do industrial minerals. 

545
00:26:45,520 --> 00:26:49,240
And there's some examples there,
Orion's, you know, funded, you 

546
00:26:49,240 --> 00:26:53,800
know, construction for projects 
in salt and gypsum there, 

547
00:26:53,960 --> 00:26:57,640
mineral sands as well. 
So again, commodities where you 

548
00:26:57,640 --> 00:27:00,160
probably see, you know, less 
huge tailwinds there. 

549
00:27:00,160 --> 00:27:02,960
But you know, if the 
construction, you know, goes 

550
00:27:02,960 --> 00:27:05,760
well on time, on budget, you 
ramp up, you can still get your 

551
00:27:05,760 --> 00:27:08,680
return there from that rewrite. 
You don't necessarily have to 

552
00:27:08,680 --> 00:27:11,400
have these, you know, phenomenal
commodity price tailwinds as 

553
00:27:11,400 --> 00:27:13,240
well. 
Trav, you know what private 

554
00:27:13,240 --> 00:27:15,520
equity loves? 
They love an easy win. 

555
00:27:15,520 --> 00:27:20,360
They love being able to goose 
that IRR with a nice easy win, 

556
00:27:20,640 --> 00:27:23,960
be it a producing asset or a 
development stage project. 

557
00:27:24,080 --> 00:27:25,360
And I've got a little one that 
comes to mind. 

558
00:27:25,360 --> 00:27:27,600
I'm curious if you're thinking 
the same thing when it comes to 

559
00:27:27,800 --> 00:27:29,840
mining private equity? 
Easy win. 

560
00:27:29,840 --> 00:27:32,720
Swap out your ground support 
regime or whatever was in the 

561
00:27:32,720 --> 00:27:35,680
spreadsheet before, be it 
development or otherwise, and 

562
00:27:35,680 --> 00:27:39,200
put in Sandy ground support, the
biggest turn around optimizer 

563
00:27:39,200 --> 00:27:41,720
you could ever think of. 
Because Sandy Ground support the

564
00:27:41,720 --> 00:27:45,440
reliability mate, the the cost 
efficiency, the, the, the 

565
00:27:45,440 --> 00:27:48,760
ability for it to be customized 
to whatever your operation is. 

566
00:27:49,080 --> 00:27:52,120
The the short timelines it takes
to get to you from from whatever

567
00:27:52,120 --> 00:27:53,880
manufacturing facility there is 
globally. 

568
00:27:54,080 --> 00:27:56,840
The ability to speak with 
wonderful people like Derek, 

569
00:27:56,840 --> 00:27:59,560
Kurt and the Sammy Ground 
support team all over the globe.

570
00:28:00,720 --> 00:28:02,400
It's it's a no brainer for a 
project uplift. 

571
00:28:02,440 --> 00:28:05,120
Money miners out there, rest 
assured, Travis and I have 

572
00:28:05,160 --> 00:28:08,320
actually gone and done a bit of 
DD on our very own Sandvik 

573
00:28:08,320 --> 00:28:10,200
ground support. 
We've seen them galvanized the 

574
00:28:10,200 --> 00:28:13,520
equipment out at sight. 
So we know first hand that it's 

575
00:28:13,520 --> 00:28:15,880
great quality. 
It's going to save you money in 

576
00:28:15,880 --> 00:28:20,040
the long run, so go buy yourself
a Christmas gift, put an order 

577
00:28:20,040 --> 00:28:23,000
in for Sandvik Ground Support 
and make your and the team at 

578
00:28:23,000 --> 00:28:24,320
Sandvik Ground Supports 
Christmas. 

579
00:28:24,800 --> 00:28:26,840
I'm galvanizing my Christmas 
presents this year. 

580
00:28:28,400 --> 00:28:30,440
Another no brainer. 
Go Sandvik. 

581
00:28:30,600 --> 00:28:33,800
Thanks Sandvik Ground support. 
To the point of concentration, I

582
00:28:33,800 --> 00:28:36,680
think it would be the perfect 
time to speak about incentives 

583
00:28:36,680 --> 00:28:39,800
because as you know, they they 
drive almost everything and 

584
00:28:40,200 --> 00:28:43,440
there are so many different kind
of incentives from the different

585
00:28:43,440 --> 00:28:47,600
parties involved here, but 
they're a huge driver of the way

586
00:28:47,600 --> 00:28:52,240
these PE funds act. 
So can you break down management

587
00:28:52,400 --> 00:28:56,000
fees, performance fees and then 
we can kind of get into to how 

588
00:28:56,000 --> 00:28:57,720
these shape the behaviors? 
Sure. 

589
00:28:58,480 --> 00:29:00,640
Well, look, most, most all PE 
funds will have a management 

590
00:29:00,640 --> 00:29:02,400
fee. 
You know, that's to keep the 

591
00:29:02,400 --> 00:29:04,480
lights on, pay staff. 
And it's probably no different 

592
00:29:04,720 --> 00:29:08,960
to other, you know, managed, you
know, public equity funds as 

593
00:29:08,960 --> 00:29:11,040
well. 
So you know that, that that's 

594
00:29:11,040 --> 00:29:13,840
salaries, you know, typically 
2%. 

595
00:29:13,840 --> 00:29:16,000
We're starting to see that come 
down for some newer funds. 

596
00:29:16,000 --> 00:29:18,320
You know, maybe it's 1 1/2 
percent of, you know, assets 

597
00:29:18,320 --> 00:29:20,680
under management. 
And that's, you know, those fees

598
00:29:20,680 --> 00:29:23,240
accrue on capital that you've 
called from the investors as 

599
00:29:23,240 --> 00:29:25,320
well. 
Doesn't start day one stays, 

600
00:29:25,360 --> 00:29:26,960
starts the time they start 
coming in. 

601
00:29:26,960 --> 00:29:28,680
And if you distribute the 
capital back, you know, you're 

602
00:29:28,680 --> 00:29:30,240
not accruing fees on that as 
well. 

603
00:29:30,720 --> 00:29:32,640
So that's, that's pretty par for
the course. 

604
00:29:32,880 --> 00:29:35,840
The real incentive in the 
private equity model is the 

605
00:29:35,840 --> 00:29:38,640
performance fee. 
So that fund manager, you know, 

606
00:29:38,640 --> 00:29:42,640
that is that is the huge 
leverage they have is, is 

607
00:29:42,640 --> 00:29:45,280
getting the performance fee if 
the investment goes right. 

608
00:29:45,640 --> 00:29:48,400
So you know, that is a 
performance fee. 

609
00:29:48,680 --> 00:29:52,760
It's typically, you know, a 
large percent of you know, 

610
00:29:52,760 --> 00:29:55,440
profits above a hurdle rate. 2 
and 20 the prevailing. 

611
00:29:55,440 --> 00:29:57,720
Model that's, that's typically 
what it's been, but again, it's,

612
00:29:58,080 --> 00:30:00,200
you know, it can change. 
It's very, you know, it's 

613
00:30:00,200 --> 00:30:02,360
confidential amongst all, all 
the different funds. 

614
00:30:02,680 --> 00:30:04,960
But you know, you know, there is
some pushback now. 

615
00:30:04,960 --> 00:30:08,360
I think, you know, there's yeah,
that's been a traditional model,

616
00:30:08,360 --> 00:30:11,960
but a lot of investors are 
starting to push back on that 

617
00:30:11,960 --> 00:30:16,040
and, and funds are, you know, 
managers are starting to offer a

618
00:30:16,040 --> 00:30:18,520
slightly lower fees in some 
places as well. 

619
00:30:18,840 --> 00:30:21,000
But yes, typically the 
performance fee is, you know, 

620
00:30:21,000 --> 00:30:24,160
around 20% of, you know, profits
above the hurdle rate. 

621
00:30:24,880 --> 00:30:26,640
So that what's the typical 
hurdle? 

622
00:30:26,640 --> 00:30:30,040
Rate. 
Probably 7-8 percent, something 

623
00:30:30,040 --> 00:30:35,880
like that. 
So the GP, the fund managed 

624
00:30:35,880 --> 00:30:38,960
there, is really incentivized to
do 2 things, get a great 

625
00:30:38,960 --> 00:30:43,080
multiple and get it really 
quickly and distribute that 

626
00:30:43,080 --> 00:30:46,720
capital, you know, quickly back,
back to the LP there. 

627
00:30:47,200 --> 00:30:51,480
Ultimately, the PE fund manager 
is in the game of distributing 

628
00:30:51,480 --> 00:30:52,920
capital. 
They're raising capital with 

629
00:30:52,920 --> 00:30:56,040
these funds and distributing it,
you know, ideally as fast as you

630
00:30:56,040 --> 00:30:59,480
can. 
Those that have been successful 

631
00:30:59,480 --> 00:31:03,200
in raising lots of funds and 
having a lot of longevity in the

632
00:31:03,200 --> 00:31:05,800
industry, I think aren't 
necessarily focused on the 

633
00:31:05,800 --> 00:31:08,120
perfect outcome, getting the 
highest multiple. 

634
00:31:08,520 --> 00:31:10,040
It's all about providing 
liquidity. 

635
00:31:10,040 --> 00:31:13,240
So you know, you might be 
leaving something on the table, 

636
00:31:13,240 --> 00:31:17,200
but you know, finding an exit 
or, or taking the exit if it's 

637
00:31:17,200 --> 00:31:19,120
on the table and there's 
liquidity there and, and 

638
00:31:19,120 --> 00:31:22,200
providing distribution back to 
LP's is really important. 

639
00:31:22,200 --> 00:31:28,440
So time, time is everything and 
you really do have to, you know,

640
00:31:28,440 --> 00:31:32,880
work hard to get there. 
So that's what motivates the 

641
00:31:32,880 --> 00:31:35,680
fund manager. 
You know, people who sit inside,

642
00:31:35,800 --> 00:31:38,960
you know the the fund manager 
who might have carry, that's 

643
00:31:39,080 --> 00:31:42,520
generally, you know most senior 
people, you know there might be 

644
00:31:42,640 --> 00:31:44,440
having carry. 
Is exposure to that 20% 

645
00:31:44,440 --> 00:31:45,400
performance? 
That's right. 

646
00:31:45,400 --> 00:31:47,520
Yeah. 
So the fund manager, you know, 

647
00:31:47,600 --> 00:31:49,760
contributes to the fund and 
that's what aligns them. 

648
00:31:50,080 --> 00:31:52,400
So in the, in the 2 and 20 
model, you know, they'll 

649
00:31:52,600 --> 00:31:56,640
contribute 2% of the capital 
into that fund so that that's 

650
00:31:56,640 --> 00:31:59,720
their skin in the game. 
Effectively, it's the leverage 

651
00:31:59,720 --> 00:32:02,440
they'll get from the performance
fee on the way back. 

652
00:32:02,440 --> 00:32:05,760
If assuming, you know, there's 
some nuances to it, but assuming

653
00:32:05,760 --> 00:32:10,400
the fund has a 2X and, and, and 
it's all paying carry above this

654
00:32:10,400 --> 00:32:14,600
hurdle rate that, you know, 2% 
of capital that that came in, 

655
00:32:14,640 --> 00:32:17,880
you know, is effectively A10 X 
for the carry holders there, 

656
00:32:17,880 --> 00:32:20,840
right? 
So huge leverage for them if it 

657
00:32:20,840 --> 00:32:23,640
goes well. 
On the contrary, if it doesn't 

658
00:32:23,640 --> 00:32:26,120
go well, you know, they've put 
capital into the fund and mine 

659
00:32:26,120 --> 00:32:28,360
don't actually see a return on 
it as well. 

660
00:32:28,360 --> 00:32:32,000
So that is, you know, the 
model's way of aligning, you 

661
00:32:32,000 --> 00:32:36,360
know, the fund manager to the 
LP's in there and incentivizing 

662
00:32:36,360 --> 00:32:38,840
them with this huge leverage, 
you know, to make it go well. 

663
00:32:39,640 --> 00:32:43,120
Can I, can I peel into some 
parts of that model a little bit

664
00:32:43,120 --> 00:32:46,960
too? 
So, so the 2% that is like the 

665
00:32:46,960 --> 00:32:50,320
management fee and and that gets
that gets triggered from the 

666
00:32:50,320 --> 00:32:52,200
point that the the capital call 
happens. 

667
00:32:52,960 --> 00:32:56,320
But that's 2% on funds deployed,
not not mark to market of what 

668
00:32:56,320 --> 00:32:58,480
whatever the portfolio is worth 
at that at any point in time 

669
00:32:58,480 --> 00:33:00,960
because you can't mark to market
in a liquid mine that didn't 

670
00:33:00,960 --> 00:33:01,520
work. 
Cost based. 

671
00:33:01,720 --> 00:33:03,320
Cost based? 
Cost based. 

672
00:33:03,440 --> 00:33:07,080
Cool. 
And so, you know, are, are there

673
00:33:07,360 --> 00:33:10,800
some cases where like a, a fund 
might might have existed or 

674
00:33:10,800 --> 00:33:12,920
whatnot and there's a few things
in the portfolio that went pear 

675
00:33:12,920 --> 00:33:16,160
shaped, but but because and so 
there's no chance of getting any

676
00:33:16,160 --> 00:33:20,200
carry, but there's but there's 
no real incentive to not exit 

677
00:33:20,200 --> 00:33:21,120
the portfolio. 
Because it's. 

678
00:33:21,320 --> 00:33:24,720
Still still kind of 2% being 
paid on a, on a much higher, you

679
00:33:24,720 --> 00:33:28,120
know, number than than and just 
get like a zombie fund that's 

680
00:33:28,120 --> 00:33:29,560
out there. 
Yeah, whether it's intention or 

681
00:33:29,560 --> 00:33:32,840
not a different question. 
But you know, finding liquidity 

682
00:33:32,840 --> 00:33:37,560
for, yeah, private companies and
some of the niche commodities in

683
00:33:37,560 --> 00:33:39,480
far-flung places can be 
difficult, right. 

684
00:33:39,840 --> 00:33:42,320
So, you know, you can't 
necessarily just, you know, go 

685
00:33:42,320 --> 00:33:45,000
to market and sell these and 
find an exit whenever you want. 

686
00:33:45,720 --> 00:33:47,520
You might have a very small 
window and you might have to do 

687
00:33:47,520 --> 00:33:51,120
a lot of work to get there. 
So they inevitably sit there. 

688
00:33:51,120 --> 00:33:55,200
And yes, there is a management 
fee being like a crude on on 

689
00:33:55,200 --> 00:33:58,080
these on these investments that 
sit inside the funds. 

690
00:33:58,080 --> 00:34:01,240
So again, makes it really hard 
for the fund manager to try and 

691
00:34:01,240 --> 00:34:04,600
catch up on that. 
Yeah, there is, you know. 

692
00:34:05,640 --> 00:34:08,400
That's that's one of the 
interesting incentive like 

693
00:34:08,400 --> 00:34:09,600
things I can see about the 
model. 

694
00:34:09,600 --> 00:34:11,199
Another interesting incentive. 
I've got two more of these. 

695
00:34:11,199 --> 00:34:12,840
Another interesting incentive 
thing I can see is like. 

696
00:34:13,120 --> 00:34:14,199
It's an issue. 
I agree. 

697
00:34:14,320 --> 00:34:16,080
It's, you know, it could be 
abused. 

698
00:34:17,199 --> 00:34:18,280
Or just something to be aware 
of. 

699
00:34:18,800 --> 00:34:22,080
There's another one is like the 
the motivation to deploy very 

700
00:34:22,080 --> 00:34:23,880
quickly. 
Like if you're, you know, like, 

701
00:34:23,920 --> 00:34:26,600
because you're like, I think 
like I think of the, the 

702
00:34:26,600 --> 00:34:28,360
Quintero example as a, as a 
great one. 

703
00:34:28,480 --> 00:34:31,440
What what amazing motivation 
there is to deploy dry dry 

704
00:34:31,440 --> 00:34:35,239
powder as a as a freshly raised 
PE fund because you start. 

705
00:34:35,639 --> 00:34:38,280
Yeah, big management fees mean 
you can, you know, build out 

706
00:34:38,480 --> 00:34:41,639
your own team, you can assess 
more opportunities, you know, 

707
00:34:41,639 --> 00:34:44,639
you build out the platform and 
the capabilities of the fund 

708
00:34:44,639 --> 00:34:46,600
manager itself. 
Because you often see the next 

709
00:34:46,600 --> 00:34:48,639
raise within a couple years as 
well. 

710
00:34:48,639 --> 00:34:51,040
And the faster you deploy and if
nothing went pear shaped, then 

711
00:34:51,040 --> 00:34:54,320
you can you can raise another 
fund before you have something 

712
00:34:54,320 --> 00:34:56,159
in the portfolio that went pear 
shaped, if you know what I mean 

713
00:34:56,159 --> 00:34:56,760
as well. 
So like. 

714
00:34:57,080 --> 00:35:00,120
Cantera's Fund 2 was less than 
two years after Fund one. 

715
00:35:00,440 --> 00:35:03,120
Yeah, that, that's right. 
I mean, if you can get momentum,

716
00:35:03,120 --> 00:35:06,120
I think as a fund manager, 
that's a great way to set up, 

717
00:35:06,200 --> 00:35:07,640
you know, it's a sustainable 
business. 

718
00:35:07,640 --> 00:35:12,280
Or give yourself a lot of 
runway, you know, to to stay in 

719
00:35:12,280 --> 00:35:14,160
the game, right? 
Yeah, because there's going to 

720
00:35:14,160 --> 00:35:17,960
be a lot of bumps along the way.
And the last, the last kind of 

721
00:35:17,960 --> 00:35:21,400
incentive thing that I, I wanted
to raise was, so you've got five

722
00:35:21,400 --> 00:35:24,040
years to deploy right now. 
When that five years typically 

723
00:35:24,160 --> 00:35:26,440
is is approaching and you 
actually haven't fully deployed 

724
00:35:26,440 --> 00:35:30,080
the fund, then like have you 
heard stories of, do you ever 

725
00:35:30,080 --> 00:35:35,560
observe like PE groups like that
that may have actually, they may

726
00:35:35,560 --> 00:35:37,400
have just like, you know, there 
might have been some asset that 

727
00:35:37,400 --> 00:35:39,640
was financeable, but it'd been 
kicked around a very long time 

728
00:35:39,680 --> 00:35:43,160
and then because because the the
the window was closing, you 

729
00:35:43,200 --> 00:35:44,840
know. 
I can't think of any examples. 

730
00:35:45,640 --> 00:35:49,400
I can think of some other 
examples or funds that know of 

731
00:35:49,400 --> 00:35:51,000
where you know it wasn't fully 
deployed. 

732
00:35:51,280 --> 00:35:53,560
Yeah, which is not an issue at 
all. 

733
00:35:54,080 --> 00:35:56,720
It, it just means when you go to
market to raise your next fund, 

734
00:35:56,720 --> 00:35:59,280
they'll say, yeah, how much did 
you deploy from your last one? 

735
00:35:59,280 --> 00:36:01,600
You say, well, we only deployed 
80%, so it makes it hard to 

736
00:36:01,600 --> 00:36:04,920
raise a bigger fund. 
It's all about, yeah, can you 

737
00:36:04,920 --> 00:36:08,080
fully deploy capital for this 
particular strategy? 

738
00:36:08,680 --> 00:36:11,560
As a function of the the 
opportunities that are out there

739
00:36:11,560 --> 00:36:13,280
as well. 
Yeah, time in the market, that's

740
00:36:13,280 --> 00:36:14,840
right. 
And you risk appetite. 

741
00:36:14,840 --> 00:36:19,480
So yes, there's incentives from 
the fund manager to to, to fully

742
00:36:19,480 --> 00:36:22,360
deploy the fund regardless of, 
you know, the quality of 

743
00:36:22,720 --> 00:36:24,920
investments there. 
But, you know, you want them to 

744
00:36:24,920 --> 00:36:26,760
be incentivized by that 
performance fee. 

745
00:36:28,200 --> 00:36:30,040
And then coming back to 
incentives, generally, I think 

746
00:36:30,040 --> 00:36:32,640
if they're, you know, first time
fund manager, you know, they're 

747
00:36:32,640 --> 00:36:35,600
there to make it, you know, 
they're personally incentivized.

748
00:36:36,440 --> 00:36:41,400
You know, it's not like, you 
know, they're made per SE and 

749
00:36:42,000 --> 00:36:44,120
somewhat of a, you know, a 
lifestyle. 

750
00:36:45,200 --> 00:36:47,720
Yeah, those are the ones, if I 
was investing in a pay fund, 

751
00:36:47,720 --> 00:36:50,720
that's what I would be looking 
for, you know, someone who's 

752
00:36:50,720 --> 00:36:53,960
personally, you know, got the 
most to gain than anyone else, 

753
00:36:53,960 --> 00:36:57,520
right. 
And it, it's an important thing,

754
00:36:58,280 --> 00:37:01,120
you know, LP's coming to funds 
do a lot of diligence on the 

755
00:37:01,120 --> 00:37:04,240
fund manager themselves. 
You know, even before there 

756
00:37:04,240 --> 00:37:07,560
might be a portfolio of, you 
know, pipeline investments that 

757
00:37:07,560 --> 00:37:10,880
they can show, a lot of it's 
focused on track record and you 

758
00:37:10,880 --> 00:37:13,960
know, the capabilities of, you 
know, the key people in in the 

759
00:37:13,960 --> 00:37:16,560
fund. 
I think there's a good reason 

760
00:37:16,560 --> 00:37:20,200
why Buffett set no management 
fee and a higher performance fee

761
00:37:20,200 --> 00:37:22,840
because he was pretty aware of 
these things back in the day. 

762
00:37:23,400 --> 00:37:25,280
There's one more incentive I do 
want to talk about though, and 

763
00:37:25,280 --> 00:37:30,240
that is of the endowments. 
So we spoke about them 

764
00:37:30,720 --> 00:37:35,320
allocating a small slither of 
the, the massive amounts of 

765
00:37:35,320 --> 00:37:38,600
money that they have and could 
be super funds here in 

766
00:37:38,600 --> 00:37:40,440
Australia. 
But we, we like to think of the,

767
00:37:40,600 --> 00:37:43,480
the universities and other 
endowments in, in the States. 

768
00:37:43,880 --> 00:37:47,560
And I'd love you just to share a
bit more color on how they might

769
00:37:47,560 --> 00:37:51,440
think about allocating to, to 
mining it being maybe a slither 

770
00:37:51,440 --> 00:37:54,960
of an allocation that goes 
towards private assets and a 

771
00:37:54,960 --> 00:37:59,120
slither of that is onwards pass 
to real asset investments, you 

772
00:37:59,120 --> 00:38:01,360
know, commodity related type 
things. 

773
00:38:01,400 --> 00:38:04,440
And maybe the incentive that 
they have for it to be a private

774
00:38:04,440 --> 00:38:06,640
asset that's not always going to
get marked. 

775
00:38:06,640 --> 00:38:08,920
It's not going to get marked on 
a, on a daily basis. 

776
00:38:08,920 --> 00:38:11,520
It's much steadier in the 
portfolio to make their, but 

777
00:38:11,720 --> 00:38:13,960
returns look more balanced, at 
least for a period of time. 

778
00:38:15,240 --> 00:38:19,280
Well, Kevin, just saying no, no 
expert on on this subject. 

779
00:38:19,280 --> 00:38:22,400
This is all, you know, 
secondhand not haven't been yet 

780
00:38:22,400 --> 00:38:25,960
spending a lot of FaceTime with 
with those sorts of asset 

781
00:38:25,960 --> 00:38:28,440
managers. 
But what I could say is that, 

782
00:38:28,560 --> 00:38:31,840
you know, they, most of them 
don't understand mining. 

783
00:38:32,720 --> 00:38:36,040
You know, in terms of finding 
those that understand mining, 

784
00:38:36,640 --> 00:38:39,600
that's quite rare. 
So a big part of the the 

785
00:38:39,600 --> 00:38:42,360
marketing of the PE fund is 
probably just educating, you 

786
00:38:42,360 --> 00:38:45,600
know, these LP's on why they 
should allocate to natural 

787
00:38:45,600 --> 00:38:49,400
resources and commodities. 
So that that is a big piece. 

788
00:38:49,880 --> 00:38:52,720
The second piece is those that 
do understand commodities. 

789
00:38:54,000 --> 00:39:00,960
Yeah, still, you know, need 
still pretty simplistic in 

790
00:39:00,960 --> 00:39:05,520
their, in their approach there. 
You know, all these PE funds in,

791
00:39:05,520 --> 00:39:08,240
in mining have, you know, quite 
nuanced and, and diverse 

792
00:39:08,240 --> 00:39:11,680
approaches. 
So you know, they're receptive 

793
00:39:11,680 --> 00:39:14,280
to to all of these and they're 
probably going to allocate to 1,

794
00:39:14,280 --> 00:39:17,640
maybe two of those. 
But you know, just finding those

795
00:39:17,640 --> 00:39:21,040
that you know, want to allocate 
to mining is is hard enough. 

796
00:39:22,280 --> 00:39:24,440
So that's, that's how they think
about mining. 

797
00:39:25,040 --> 00:39:29,480
If you go back a step, yeah, 
they, they have these enormous, 

798
00:39:29,600 --> 00:39:33,120
enormous funds where, yeah, 
they're thinking more about, you

799
00:39:33,120 --> 00:39:34,760
know, how much they're 
allocating to, you know, 

800
00:39:34,880 --> 00:39:39,160
private, private markets. 
That's a big decision as well. 

801
00:39:39,160 --> 00:39:43,080
So, yeah, minimizing volatility 
in the portfolio, having 

802
00:39:43,400 --> 00:39:46,200
exposure to private equity where
there's largely like private 

803
00:39:46,200 --> 00:39:50,160
asset classes that can be sort 
of mark to market, you know, 

804
00:39:50,160 --> 00:39:53,360
without the volatility of, you 
know, movements in the macro 

805
00:39:53,360 --> 00:39:56,600
environment that that is a nice 
way just to smooth out their 

806
00:39:56,600 --> 00:39:58,400
portfolio. 
And that can be, you know, one 

807
00:39:58,400 --> 00:40:01,320
of the reasons why they're 
entertaining looking at, you 

808
00:40:01,320 --> 00:40:03,720
know, other private equity 
managers or increasing the 

809
00:40:03,720 --> 00:40:07,400
bucket size that's going to to 
private equity and potentially 

810
00:40:07,400 --> 00:40:09,600
like, you know, mining private 
equity funds. 

811
00:40:10,160 --> 00:40:13,680
Yeah, yeah. 
That, that education component 

812
00:40:13,680 --> 00:40:16,680
is I think that's prevalent for 
for all investors in the mining 

813
00:40:16,680 --> 00:40:20,160
space as well, specifically the 
ones outside of Australia. 

814
00:40:20,160 --> 00:40:21,760
I think in Australia we get it a
bit more. 

815
00:40:21,760 --> 00:40:26,320
But Even so, there's been a kind
of dearth of of equity managers 

816
00:40:26,320 --> 00:40:28,840
in, in the mining space as well.
And it's hard to get you 

817
00:40:28,840 --> 00:40:30,640
allocations. 
And perhaps that's just a 

818
00:40:31,200 --> 00:40:34,120
component of a bigger problem 
with with active management. 

819
00:40:34,360 --> 00:40:36,640
Yeah, I think that's, I mean 
more just a bigger challenge for

820
00:40:36,640 --> 00:40:38,680
the industry, right? 
It's a poorly understood 

821
00:40:38,680 --> 00:40:42,360
industry, yeah, even in this 
country, but you know, you know,

822
00:40:42,360 --> 00:40:44,960
globally as well. 
Yet now I think it's more 

823
00:40:44,960 --> 00:40:47,080
awareness about supply chains, 
critical minerals. 

824
00:40:47,080 --> 00:40:49,680
It's starting to get a little 
bit more, you know, visibility. 

825
00:40:49,680 --> 00:40:53,120
But it is just a poorly 
understood industry for what is 

826
00:40:53,120 --> 00:40:55,320
quite meaningful in in most 
economies. 

827
00:40:55,320 --> 00:40:59,400
Can I ask you a question about 
the opportunity selection? 

828
00:40:59,400 --> 00:41:02,320
Like in some respects, like 
there's a very diligent 

829
00:41:02,320 --> 00:41:05,320
investment process that you have
to kind of go through to get a 

830
00:41:05,320 --> 00:41:09,040
deal done within these like. 
We talked about construction 

831
00:41:09,040 --> 00:41:11,040
risk and how concentrated 
portfolios are. 

832
00:41:11,040 --> 00:41:14,000
So, you know, the underwriting 
process for this is is got to be

833
00:41:14,000 --> 00:41:15,640
very, very thorough. 
Yeah. 

834
00:41:16,360 --> 00:41:20,280
And it's, it's thorough. 
It I imagine can happen quickly,

835
00:41:20,280 --> 00:41:22,400
but often might be like take a 
bit of time. 

836
00:41:22,720 --> 00:41:26,240
Like are there any limitations 
or anything to do with with with

837
00:41:26,240 --> 00:41:29,040
the way that that happens? 
Do you think private equity sees

838
00:41:29,040 --> 00:41:30,240
the best deals? 
Like what do you think? 

839
00:41:30,240 --> 00:41:33,480
The best deals sometimes don't 
even get seen by private equity.

840
00:41:33,520 --> 00:41:34,880
Yeah, that's a really good 
question. 

841
00:41:35,000 --> 00:41:38,200
Selection bias, yeah. 
Yeah, there, there would be. 

842
00:41:38,200 --> 00:41:42,280
I would say, look, you know, 
when it's a really hot 

843
00:41:42,280 --> 00:41:46,160
commodity, it's in vogue, you 
know, you're you're moving, you 

844
00:41:46,160 --> 00:41:49,160
know, the top end of the cycle. 
Public equity is available. 

845
00:41:49,880 --> 00:41:53,560
Look, right now in precious and 
you know, arguably in some of 

846
00:41:53,560 --> 00:41:56,320
these critical metals like, you 
know, rare earths as well, you 

847
00:41:56,320 --> 00:41:58,960
know, companies are able to go 
and raise, you know, significant

848
00:41:58,960 --> 00:42:01,320
quantums on on public equity 
markets right now. 

849
00:42:01,320 --> 00:42:04,520
They don't need to come to a 
private equity fund or 

850
00:42:04,520 --> 00:42:08,520
alternative, you know, sources 
of capital and, you know, pay 

851
00:42:08,800 --> 00:42:11,680
higher fees or give a little bit
more more a way to bring that 

852
00:42:11,680 --> 00:42:16,640
capital in the door. 
So, you know, the private equity

853
00:42:16,640 --> 00:42:20,080
is needed in in markets when you
know, you're at the bottom of 

854
00:42:20,080 --> 00:42:22,120
the market and public equity 
can't be raised. 

855
00:42:22,480 --> 00:42:25,160
You're in, you know, really nice
commodities that are poorly 

856
00:42:25,160 --> 00:42:28,840
understood, that need a lot of 
work to, to understand the 

857
00:42:28,840 --> 00:42:32,120
fundamentals of those, those 
commodity markets or they're, 

858
00:42:32,120 --> 00:42:34,120
you know, far fun places. 
You know, there might be great 

859
00:42:34,120 --> 00:42:37,240
projects too, but you know, just
we'll be outside the risk 

860
00:42:37,240 --> 00:42:40,520
appetite for most, you know, 
public equity investors as well.

861
00:42:40,520 --> 00:42:44,520
So do they see the best deals? 
You know, it depends. 

862
00:42:44,520 --> 00:42:48,000
You know, there's, there's great
assets out there that you had 

863
00:42:48,000 --> 00:42:50,760
absolutely no love in, in the 
public markets and they'll 

864
00:42:50,760 --> 00:42:52,560
picked up by, you know, PE 
funds. 

865
00:42:53,080 --> 00:42:56,520
And then, you know, the markets 
turn, you know, a lot of work's 

866
00:42:56,520 --> 00:42:59,800
done to de risk, risk appetites 
change and these PE funds can 

867
00:42:59,800 --> 00:43:03,360
find an exit for these assets 
that are viewed very differently

868
00:43:03,360 --> 00:43:05,600
in a different market, different
conditions. 

869
00:43:05,600 --> 00:43:09,520
And that is like the perfect 
your private equity investment. 

870
00:43:09,520 --> 00:43:13,440
You find something unloved and 
at the bottom of the cycle do 

871
00:43:13,440 --> 00:43:16,400
some work and then, you know, 
get the timing right and and it 

872
00:43:16,400 --> 00:43:19,720
is recognized and there's huge 
value uplift there. 

873
00:43:21,320 --> 00:43:22,720
So let's talk about the 
conditions now. 

874
00:43:22,800 --> 00:43:26,480
You mentioned 15,000 private 
equity groups before. 

875
00:43:26,480 --> 00:43:29,320
Obviously only a small number of
them are in the mining space, 

876
00:43:29,680 --> 00:43:33,000
but there has been an increasing
number over time. 

877
00:43:33,640 --> 00:43:36,520
We've also seen more and more 
sources of capital in in the 

878
00:43:36,520 --> 00:43:39,640
mining space, be it sovereign 
wealth funds, be it the 

879
00:43:39,640 --> 00:43:43,160
government coming in, be it 
streamers and royalties flexing 

880
00:43:43,160 --> 00:43:45,000
their muscles and having greater
allocations. 

881
00:43:45,440 --> 00:43:49,360
How does the the landscape look 
right now, perhaps contrasting 

882
00:43:49,360 --> 00:43:51,760
with when you came in? 
And what do you see that looking

883
00:43:51,760 --> 00:43:55,360
like a few years down the road? 
It's a good question because it 

884
00:43:55,360 --> 00:43:57,920
certainly is evolving and you 
know, has been evolving for a 

885
00:43:57,920 --> 00:44:01,120
long time. 
Look, there's I think lots more 

886
00:44:01,120 --> 00:44:05,200
mining PE funds around now. 
Yeah, there's the those that 

887
00:44:05,200 --> 00:44:08,960
were early in the game, you 
know, 1520 years ago that now 

888
00:44:08,960 --> 00:44:11,160
have multiple strategies that 
have been, you know, quite 

889
00:44:11,160 --> 00:44:14,400
successful, sustainable, raised 
multiple fund vintages in each 

890
00:44:14,400 --> 00:44:17,720
strategy, diversified across 
different strategies as well. 

891
00:44:18,280 --> 00:44:20,640
And there's new entrance to the 
game as well. 

892
00:44:21,400 --> 00:44:24,240
People that have worked in one 
fund, they've gone out to start 

893
00:44:24,240 --> 00:44:27,760
their own fund, etcetera. 
So there there's definitely more

894
00:44:27,760 --> 00:44:32,240
mining PE funds out there. 
But in terms of capital being 

895
00:44:32,240 --> 00:44:36,040
allocated to, to mining PE, my 
gut feeling is it's probably 

896
00:44:36,040 --> 00:44:39,480
hasn't changed that much. 
However, there's more competing 

897
00:44:39,480 --> 00:44:43,120
sources of capital for the the 
actual assets out there, as you 

898
00:44:43,120 --> 00:44:45,960
say. 
So you've definitely seen your 

899
00:44:45,960 --> 00:44:48,200
sort of government step up and 
want to be involved more. 

900
00:44:48,200 --> 00:44:52,880
They don't know how to do it 
well and, and try still trying 

901
00:44:52,880 --> 00:44:55,320
to figure out, you know, the 
best strategy to allocate there.

902
00:44:55,320 --> 00:44:58,160
But you know, you are seeing 
them, you know, have a great 

903
00:44:58,160 --> 00:45:01,360
appetite to move and, and 
prepared to write checks now. 

904
00:45:01,960 --> 00:45:04,120
And that's something that's 
changed and that's ultimately 

905
00:45:04,120 --> 00:45:08,800
competing for a competing source
of capital for PE. 

906
00:45:09,960 --> 00:45:12,160
You know, that's getting might 
be squeezed out on some 

907
00:45:12,160 --> 00:45:15,640
particular deals, particular 
commodities there as well, the 

908
00:45:15,640 --> 00:45:20,760
sovereign wealth funds as well. 
I think that's probably more on 

909
00:45:20,960 --> 00:45:23,320
sort of the stage you are in the
value chain these commodities. 

910
00:45:23,320 --> 00:45:27,920
But certainly things that 
private equity probably didn't 

911
00:45:27,920 --> 00:45:30,360
chase, things that were 
midstream or downstream where, 

912
00:45:30,360 --> 00:45:33,080
you know, the returns are 
probably more industrial like, 

913
00:45:33,080 --> 00:45:37,000
you know, single digit percents.
Yeah, there's not not great 

914
00:45:37,000 --> 00:45:40,760
economics in these assets, but 
you know, there's a lot of 

915
00:45:40,760 --> 00:45:44,440
broader, broader, broader 
benefits, you know, in country 

916
00:45:44,440 --> 00:45:48,040
building out, you know, skills, 
whole supply chains, et cetera. 

917
00:45:48,400 --> 00:45:51,320
You're seeing those groups start
to want have a big appetite to 

918
00:45:51,320 --> 00:45:53,920
do that and get ready to step in
there. 

919
00:45:54,520 --> 00:45:57,680
And they're happy to to make 
these investments without 

920
00:45:57,680 --> 00:46:00,160
compelling economics too as 
well. 

921
00:46:00,800 --> 00:46:03,000
And when you do go midstream 
downstream, obviously you need 

922
00:46:03,000 --> 00:46:04,840
the upstream feed to come along 
there. 

923
00:46:04,840 --> 00:46:08,480
So yeah, that's where, you know,
PE is starting to tie in with 

924
00:46:08,480 --> 00:46:10,360
some of these groups that are 
looking to build out the 

925
00:46:10,360 --> 00:46:13,480
midstream downstream in their 
countries, in their regions as 

926
00:46:13,480 --> 00:46:15,280
well. 
So that that's definitely 

927
00:46:15,280 --> 00:46:17,040
growing and I think it will 
continue to. 

928
00:46:17,400 --> 00:46:20,000
And that's really just playing 
into this whole, you know, 

929
00:46:20,440 --> 00:46:22,920
onshoring of the supply chain, 
thematic, you know, across the 

930
00:46:22,920 --> 00:46:26,880
whole world. 
So what does that mean for for 

931
00:46:26,880 --> 00:46:28,720
private equity returns going 
forward? 

932
00:46:29,640 --> 00:46:33,560
Well, I think it, it just 
narrows the line of where they 

933
00:46:33,560 --> 00:46:37,920
can play again to these other 
groups, you know, with sort of 

934
00:46:37,920 --> 00:46:40,880
streamers royalties able to 
provide, you know, pretty low 

935
00:46:40,880 --> 00:46:44,760
cost capital to some of these 
assets just means the universe 

936
00:46:44,760 --> 00:46:49,200
of assets that private equity 
might invest into is probably 

937
00:46:49,200 --> 00:46:53,000
shrinking. 
And in terms of private equity 

938
00:46:53,000 --> 00:46:57,440
being a competitive solution for
these companies and assets, 

939
00:46:57,440 --> 00:47:00,160
they're trying to finance it, 
They're probably less 

940
00:47:00,160 --> 00:47:04,400
competitive compared to what 
else is being given to them 

941
00:47:04,480 --> 00:47:06,840
right now as well. 
There's probably always going to

942
00:47:06,840 --> 00:47:09,840
be a need for, you know, PE 
financing in, in you get 

943
00:47:09,840 --> 00:47:14,560
difficult jurisdictions, obscure
commodities, yeah, things 

944
00:47:14,560 --> 00:47:17,320
they've got some sort of 
overhang there that, you know, 

945
00:47:17,320 --> 00:47:19,040
needs quite a lot of effort to 
resolve. 

946
00:47:19,880 --> 00:47:23,240
But the all the easy low hanging
fruit I think is is becoming 

947
00:47:23,240 --> 00:47:26,680
financed by by others. 
Is there is there a pro cyclical

948
00:47:26,680 --> 00:47:30,240
nature to the ability of private
equity funds to to to actually 

949
00:47:30,240 --> 00:47:32,480
raise their own capital as well 
like to the endowments more 

950
00:47:32,480 --> 00:47:38,400
forthcoming with with with with,
you know, you know, big funds at

951
00:47:38,800 --> 00:47:42,640
at very like you know, cyclical 
highs in commodity markets and 

952
00:47:42,640 --> 00:47:44,160
then you have to deploy it in 
the high times. 

953
00:47:44,360 --> 00:47:47,200
Is there any pro cyclical 
element to to the history of 

954
00:47:47,200 --> 00:47:49,720
private equity research I. 
I think fundraising probably has

955
00:47:49,720 --> 00:47:52,680
a degree of pro cyclically. 
Yeah, ideally you raise the up 

956
00:47:52,680 --> 00:47:54,400
and then you wait for the crash 
and then you deploy them. 

957
00:47:55,040 --> 00:47:59,080
Yeah, I mean, the the hardest 
thing I think investing 

958
00:47:59,080 --> 00:48:01,800
generally is be truly counter 
cyclical, not pay attention to 

959
00:48:01,880 --> 00:48:04,000
to the noise and everything else
going on. 

960
00:48:04,560 --> 00:48:08,080
And I'd say, you know, whether 
it's, you know, pay manager, you

961
00:48:08,080 --> 00:48:11,640
know, you and I investing retail
investors or even these, you 

962
00:48:11,640 --> 00:48:14,320
know, enormous asset managers, 
it's no different. 

963
00:48:14,320 --> 00:48:15,600
It's really hard to be 
disciplined. 

964
00:48:15,600 --> 00:48:17,680
So I think certainly. 
I don't know what you're talking

965
00:48:17,680 --> 00:48:19,400
about. 
I've done more trades in a bull 

966
00:48:19,400 --> 00:48:22,640
market. 
Certainly when when you're in a 

967
00:48:22,640 --> 00:48:25,520
good market, you know, I think 
they're a lot more receptive to,

968
00:48:25,600 --> 00:48:28,680
you know, marketing 
conversations with the pay funds

969
00:48:28,680 --> 00:48:32,000
that that are fundraising. 
And again, when it's it's 

970
00:48:32,120 --> 00:48:34,800
probably the wrong time to be, 
you know, deploying, you know, 

971
00:48:34,800 --> 00:48:36,400
they should have been there, you
know, years ago. 

972
00:48:36,400 --> 00:48:38,600
So they could come in right at 
the bottom of the cycle. 

973
00:48:39,400 --> 00:48:43,040
So, yeah, it is difficult 
because, you know, by the time a

974
00:48:43,040 --> 00:48:44,760
fund's raised and they're 
deploying, you know, you're 

975
00:48:44,760 --> 00:48:47,080
potentially at the top of the 
cycle or you've missed it, you 

976
00:48:47,080 --> 00:48:48,240
know, for particularly 
commodities. 

977
00:48:48,240 --> 00:48:50,800
And you have to shift, you know,
your strategy to other 

978
00:48:50,800 --> 00:48:55,000
commodities as well. 
So it's a very dynamic process. 

979
00:48:56,320 --> 00:48:58,640
You know, in an ideal world, 
yes, you'd have a lot of dry 

980
00:48:58,640 --> 00:49:01,080
powder, you know, a lot of 
capital committed to you, to 

981
00:49:01,080 --> 00:49:03,480
your fund that you hadn't called
down on yet. 

982
00:49:03,480 --> 00:49:05,800
And you could call it down at 
the very bottom of the market 

983
00:49:05,800 --> 00:49:07,640
when you saw the very best 
opportunities. 

984
00:49:08,120 --> 00:49:10,120
In an ideal world, that would be
how it worked. 

985
00:49:10,120 --> 00:49:12,800
But realistically, you know, 
things are doing well now. 

986
00:49:12,800 --> 00:49:15,720
You have some fantastic exits in
an older vintage fund. 

987
00:49:15,760 --> 00:49:19,960
You're getting momentum there. 
Yeah, LP's are probably pretty 

988
00:49:19,960 --> 00:49:23,040
receptive to putting money into 
a new fund, even though, yeah, 

989
00:49:23,040 --> 00:49:26,200
the commodity cycle and market 
is really at a different point 

990
00:49:26,200 --> 00:49:27,960
in time. 
Like the old time record, you 

991
00:49:27,960 --> 00:49:30,360
know, best private equity deals 
in in the mining industry. 

992
00:49:30,360 --> 00:49:32,360
It's like you get like, yeah, 
you hear stories of when you 

993
00:49:32,520 --> 00:49:35,240
when you join a PU fair. 
I mean like, oh mates, such and 

994
00:49:35,240 --> 00:49:37,760
such was the best deal ever. 
Yeah, look, there's, there's, 

995
00:49:37,760 --> 00:49:41,520
there's plenty of those around. 
You know, people talk about tin 

996
00:49:41,520 --> 00:49:44,000
baggers, but you know, I've, 
I've seen quite a few of those. 

997
00:49:44,000 --> 00:49:47,600
I know RCF had some phenomenal 
wins in, you know, rare earths 

998
00:49:47,840 --> 00:49:49,440
in the early funds with Mountain
Pass. 

999
00:49:49,480 --> 00:49:51,320
You know, that's, that's a 
pretty well known example. 

1000
00:49:51,720 --> 00:49:55,600
One of their other strategies in
mining innovation, you know, 

1001
00:49:55,600 --> 00:49:57,800
where they invest in a lot of 
different mining technology, 

1002
00:49:57,960 --> 00:50:02,200
they invested in company called 
BMT blast movement technologies,

1003
00:50:02,200 --> 00:50:06,840
these little, you know, balls 
with RFI DS that go inside blast

1004
00:50:06,840 --> 00:50:09,440
holes and they can track the 
heave, you know, you know, pit 

1005
00:50:09,920 --> 00:50:11,800
gold mines. 
So you can track where, you 

1006
00:50:11,800 --> 00:50:13,760
know, the the always being 
distributed post blast. 

1007
00:50:13,760 --> 00:50:15,800
I mean, that was a phenomenal 
investment. 

1008
00:50:15,800 --> 00:50:18,480
It was, you know, it's a sort of
product that could be readily 

1009
00:50:19,040 --> 00:50:22,720
consumed to low cost, you know, 
at at gold mines globally. 

1010
00:50:22,720 --> 00:50:26,360
So, yeah, another one of those, 
you know, phenomenal returns you

1011
00:50:26,360 --> 00:50:29,080
hear about, you know, you've got
to be lucky. 

1012
00:50:29,080 --> 00:50:31,320
But there's also a lot of work 
behind the scenes in 

1013
00:50:31,320 --> 00:50:35,120
identifying, you know, 
identifying, yeah, the right 

1014
00:50:35,120 --> 00:50:39,440
market, the right product in 
that case as well-being counter 

1015
00:50:39,440 --> 00:50:42,880
cyclical, you know, making a 
bold call to allocate, you know,

1016
00:50:42,880 --> 00:50:45,480
significant capital at the 
bottom of a market when it's 

1017
00:50:45,480 --> 00:50:49,120
hated as well. 
So yeah, there's, there's a lot 

1018
00:50:49,120 --> 00:50:51,560
of thought to it, a lot of work,
a lot of diligence done to the 

1019
00:50:51,560 --> 00:50:54,880
very, you know, calculated, you 
know, risks that are taken. 

1020
00:50:56,120 --> 00:50:59,000
Tembo and Spartan wasn't a bad 
bet, and the RCF Pilbara one 

1021
00:50:59,000 --> 00:51:00,800
that had a pretty pretty speedy 
returns. 

1022
00:51:00,840 --> 00:51:03,680
Although in my mind they're just
not private equity bets you're 

1023
00:51:03,680 --> 00:51:05,920
buying a stake in. 
Balance sheet down around, it's 

1024
00:51:05,960 --> 00:51:08,560
like, yeah, yeah. 
Yeah, I mean Altura was a 

1025
00:51:08,560 --> 00:51:12,400
distressed because I mean every,
I mean arguably Pilbara didn't 

1026
00:51:12,400 --> 00:51:14,240
have the biggest balance sheet 
at the time too. 

1027
00:51:14,240 --> 00:51:19,440
Galaxy, you know, needed raise 
capital at the time too. 

1028
00:51:20,440 --> 00:51:23,360
It was survival for all of the 
lithium players at that time. 

1029
00:51:25,000 --> 00:51:29,440
But you know, Purebra, I mean it
was one ore body and had a fence

1030
00:51:29,440 --> 00:51:31,360
put over the middle of it. 
It really should have been, you 

1031
00:51:31,360 --> 00:51:33,000
know, a single operator from day
one. 

1032
00:51:33,520 --> 00:51:35,600
It was a very logical 
consolidation to do. 

1033
00:51:35,600 --> 00:51:39,920
But yeah, had the support of 
patient counter cyclical money, 

1034
00:51:39,960 --> 00:51:42,920
you know through RCF there to to
underwrite, you know the 

1035
00:51:42,920 --> 00:51:46,040
acquisition there, which you 
know would have been hard to do 

1036
00:51:46,840 --> 00:51:49,720
on that particular example. 
You know, there was other 

1037
00:51:49,720 --> 00:51:52,120
bidders in there, another, you 
know, listed company that needed

1038
00:51:52,120 --> 00:51:55,480
to raise capital that had a had 
a proposal there. 

1039
00:51:56,080 --> 00:51:59,320
But again, contingent on 
raising, you know, public equity

1040
00:51:59,320 --> 00:52:02,440
at the bottom of the market for 
you know, close to its market 

1041
00:52:02,440 --> 00:52:05,240
cap would have been pretty hard 
to execute on versus you know, a

1042
00:52:05,240 --> 00:52:08,480
fully underwritten solution with
you know, private equity money 

1043
00:52:08,480 --> 00:52:10,520
there too. 
So, yeah, there is definitely 

1044
00:52:10,520 --> 00:52:14,320
like a role to play on the M&A 
side and providing some funding 

1045
00:52:15,360 --> 00:52:18,360
surety. 
Actual synergies in mining, 

1046
00:52:18,360 --> 00:52:20,680
that's amazing. 
There's a lot of these odd 

1047
00:52:20,720 --> 00:52:22,240
bodies with fences across the 
middle. 

1048
00:52:24,120 --> 00:52:25,600
It's just too easy. 
They're layups for you. 

1049
00:52:26,520 --> 00:52:29,760
One last one from me, Fraser, I 
want to talk about the commodity

1050
00:52:29,760 --> 00:52:32,360
traders and then stomping on the
feet of of private equity. 

1051
00:52:32,360 --> 00:52:35,600
And perhaps they're just another
player that makes the, the the 

1052
00:52:35,600 --> 00:52:37,680
playing field a bit smaller for,
for private equity. 

1053
00:52:37,680 --> 00:52:41,640
But we've seen a number of these
traditional oil commodity 

1054
00:52:41,640 --> 00:52:44,200
traders come in, build out 
metals and mining teams. 

1055
00:52:44,360 --> 00:52:48,560
A lot of them want off takes and
they're sort of finding their 

1056
00:52:48,560 --> 00:52:50,680
way in. 
Are they a competitor you think 

1057
00:52:50,800 --> 00:52:53,440
represents a a challenge to the 
the PA industry? 

1058
00:52:53,520 --> 00:52:56,240
Yeah, they are, They are, right.
Look, they've got an, you know, 

1059
00:52:56,240 --> 00:52:58,720
enormous balance sheets that 
aren't particularly productive. 

1060
00:52:58,720 --> 00:53:02,600
So, you know, low cost of 
capital, you know, for them they

1061
00:53:02,600 --> 00:53:05,320
can, you know, provide 
financing, you know, well, 

1062
00:53:05,360 --> 00:53:07,880
that's very competitive, you 
know, to any company that's 

1063
00:53:07,880 --> 00:53:09,840
looking for financing to build 
their project. 

1064
00:53:10,600 --> 00:53:11,960
So their balance sheets have 
grown. 

1065
00:53:11,960 --> 00:53:14,880
Their cost of capital is very 
competitive and they're willing 

1066
00:53:14,880 --> 00:53:17,040
to deploy it now to secure a 
product. 

1067
00:53:17,520 --> 00:53:21,320
So their, their appetite to 
transact is a lot higher and the

1068
00:53:21,320 --> 00:53:23,200
size of the checks they're 
willing to write for the 

1069
00:53:23,360 --> 00:53:26,000
equivalent amount of metal and 
product is probably higher as 

1070
00:53:26,000 --> 00:53:28,760
well. 
And there's more players in 

1071
00:53:28,760 --> 00:53:30,280
there. 
There's the conventional, you 

1072
00:53:30,280 --> 00:53:33,920
know, oil and gas, other types 
of commodity traders that are 

1073
00:53:33,920 --> 00:53:37,000
now willing to, to get into, you
know, proper, you know, 

1074
00:53:37,000 --> 00:53:40,480
concentrate trading. 
And, you know, they're going to 

1075
00:53:40,480 --> 00:53:43,680
be quite aggressive on their 
terms to secure supply, 

1076
00:53:44,040 --> 00:53:46,320
particularly as, you know, 
they're coming, you know, 

1077
00:53:46,440 --> 00:53:49,920
they're getting into the space. 
They're trying to steal a little

1078
00:53:49,920 --> 00:53:52,640
bit of market share from, you 
know, the incumbents as well. 

1079
00:53:52,640 --> 00:53:57,000
So that's definitely going to 
be, you know, competing source 

1080
00:53:57,000 --> 00:54:00,440
of capital for Pai mean if you 
know traffic euro comes in and 

1081
00:54:00,440 --> 00:54:03,360
does, you know, an off take 
prepayment facility at so for 

1082
00:54:03,360 --> 00:54:07,640
plus 2% circuit 8%, well, you 
know, PE funds not going to be 

1083
00:54:07,640 --> 00:54:10,680
able to get a return if they had
an 8% coupon on their facility 

1084
00:54:10,680 --> 00:54:12,600
to, you know, they're probably 
going to be a lot higher. 

1085
00:54:12,600 --> 00:54:14,440
They need to find other ways to 
get the return. 

1086
00:54:14,440 --> 00:54:17,720
So really hard for for people to
compete there. 

1087
00:54:19,360 --> 00:54:22,560
The trade off is maybe giving a 
what there's a bit of leakage on

1088
00:54:22,560 --> 00:54:24,760
the terms of the actual off take
as well. 

1089
00:54:25,320 --> 00:54:27,200
That's somewhat of a black box 
too. 

1090
00:54:28,200 --> 00:54:30,960
Hard to really know how much 
leakage there is what is you 

1091
00:54:30,960 --> 00:54:33,440
know market standard there. 
But you know they're certainly 

1092
00:54:33,440 --> 00:54:36,080
offering very competitive 
financing packages in parallel 

1093
00:54:36,080 --> 00:54:40,440
with with off take there. 
At the same time, you know some 

1094
00:54:40,440 --> 00:54:44,400
of these other groups, you know 
some of these other governments 

1095
00:54:45,760 --> 00:54:49,680
and just even PE funds to 
looking to secure off take as 

1096
00:54:49,680 --> 00:54:52,760
well. 
It's no longer free up for grabs

1097
00:54:52,760 --> 00:54:55,720
for everyone. 
There is a lot of demand for the

1098
00:54:55,720 --> 00:54:57,720
actual product. 
The rights to that product are 

1099
00:54:57,720 --> 00:55:03,000
becoming more and more valuable.
The the exits of private equity 

1100
00:55:03,000 --> 00:55:04,440
is just one thing I want to 
touch on too. 

1101
00:55:05,520 --> 00:55:08,360
If you've got a got a fund 
that's coming to the end of life

1102
00:55:11,280 --> 00:55:13,480
in the end of the 10 years, like
what are the options available 

1103
00:55:13,480 --> 00:55:16,000
if, if some of the some of the 
assets that are within that 

1104
00:55:16,000 --> 00:55:18,920
portfolio maybe haven't been 
realized yet or or there's 

1105
00:55:18,960 --> 00:55:20,760
there's liquidity challenges to 
realizing them? 

1106
00:55:21,000 --> 00:55:24,320
Yeah, good, Good question. 
Because yeah, it doesn't always 

1107
00:55:24,320 --> 00:55:27,320
go right. 
Yeah, you're in something pretty

1108
00:55:27,320 --> 00:55:30,520
niche, you know, diamonds in 
Lesotho to, you know, book 

1109
00:55:30,520 --> 00:55:32,960
siding. 
You know, you can't, you can't 

1110
00:55:32,960 --> 00:55:35,840
just run a sale process and flip
those things overnight. 

1111
00:55:36,280 --> 00:55:41,320
So what do you do? 
You can, you can try really hard

1112
00:55:41,440 --> 00:55:43,880
to, to make the project more 
attractive. 

1113
00:55:43,880 --> 00:55:46,880
And maybe that's an, an 
expansion, it's consolidation 

1114
00:55:46,880 --> 00:55:50,760
with, you know, a neighbor 
sending it into a larger vehicle

1115
00:55:50,760 --> 00:55:54,080
that's more diversified. 
And maybe you'll, you'll, you'll

1116
00:55:54,080 --> 00:55:56,720
take a hit there on on the 
valuation, but you might have a 

1117
00:55:56,720 --> 00:56:00,480
pathway to liquidity eventually.
Being another fund. 

1118
00:56:01,000 --> 00:56:04,760
Or well another another mining 
company there assets, assets. 

1119
00:56:04,760 --> 00:56:07,720
So these are things you could do
with the portfolio company, the 

1120
00:56:07,720 --> 00:56:11,040
investment itself. 
If that fails, what do you do? 

1121
00:56:11,040 --> 00:56:14,720
Well, it's probably more a 
problem for, you know, you see, 

1122
00:56:14,720 --> 00:56:18,640
you see more in general as PE, 
but you see extensions to funds.

1123
00:56:19,160 --> 00:56:21,360
So that might extend the fund 
beyond those 10 years. 

1124
00:56:21,360 --> 00:56:24,680
But they're not, you know, 
getting a management fee on, you

1125
00:56:24,680 --> 00:56:26,920
know, the, the capital they're 
managing anymore. 

1126
00:56:26,920 --> 00:56:30,080
They're just, you know, trying 
to buy some time to get towards 

1127
00:56:30,080 --> 00:56:33,200
an exit or pending that not 
working. 

1128
00:56:33,560 --> 00:56:37,120
You do see what's called like 
private equity secondaries where

1129
00:56:37,120 --> 00:56:40,480
they're effectively selling, you
know, the individual portfolio 

1130
00:56:40,480 --> 00:56:45,080
companies or you know, all of 
the portfolio to another fund. 

1131
00:56:45,160 --> 00:56:49,960
And there's dedicated PE funds 
that just go around mopping up, 

1132
00:56:50,280 --> 00:56:54,960
you know, these mature assets 
from, you know, yeah, funds that

1133
00:56:54,960 --> 00:56:57,720
are in there for life and 
they'll buy them a big discount.

1134
00:56:58,160 --> 00:57:00,440
The pitch for them is that, you 
know, they're much, these 

1135
00:57:00,440 --> 00:57:02,440
investments are much closer 
towards their exit. 

1136
00:57:02,440 --> 00:57:05,440
There's been a lot of capital 
sunk, a lot of value added. 

1137
00:57:05,440 --> 00:57:08,400
They just need a little bit more
time to get towards, you know, 

1138
00:57:08,400 --> 00:57:10,520
the exit. 
And so the prize is there and 

1139
00:57:10,520 --> 00:57:14,240
there are actually some examples
of really successful funds that 

1140
00:57:14,240 --> 00:57:15,400
just do. 
Sounds like a good show. 

1141
00:57:15,400 --> 00:57:18,080
Secondaries. 
The marking of how they measure 

1142
00:57:18,080 --> 00:57:20,560
those is pretty controversial. 
Absolutely as well. 

1143
00:57:21,120 --> 00:57:24,040
And and valuation across the 
board, you know, for private 

1144
00:57:24,040 --> 00:57:27,080
companies, you talked, we talked
earlier about, you know, some 

1145
00:57:27,080 --> 00:57:30,200
funds, you know, raising funds 
very quickly. 

1146
00:57:30,680 --> 00:57:35,200
You know, they've got all of 
these private investments, you 

1147
00:57:35,200 --> 00:57:37,240
know, public company they took 
private. 

1148
00:57:38,000 --> 00:57:40,320
What's it going to be valued at 
at 30th of June? 

1149
00:57:40,480 --> 00:57:43,600
Well, it's, it's a work of 
fiction. 

1150
00:57:43,960 --> 00:57:45,240
It can be whatever you want, 
right. 

1151
00:57:45,520 --> 00:57:47,400
Look, there is process to it. 
It is ordered. 

1152
00:57:47,400 --> 00:57:50,200
But ultimately, yeah, there is 
some, it's a narrative on 

1153
00:57:50,200 --> 00:57:53,080
valuation and, you know, 
commodity prices. 

1154
00:57:53,080 --> 00:57:55,840
You're choosing. 
Yeah, every mining project 

1155
00:57:55,840 --> 00:57:59,520
sensitive to that, you know, 
let's say it's it's a market 

1156
00:57:59,520 --> 00:58:01,680
based approach, you're looking 
at other comparables 

1157
00:58:01,680 --> 00:58:04,440
transactions, you know, you're 
cherry picking what you want 

1158
00:58:04,440 --> 00:58:07,000
there. 
So you know, these funds can 

1159
00:58:07,000 --> 00:58:10,680
manage the valuation volatility 
by managing these private 

1160
00:58:10,680 --> 00:58:13,800
company valuations. 
If your whole portfolio is 

1161
00:58:13,800 --> 00:58:16,560
private company investments, you
can call it whatever you want 

1162
00:58:16,560 --> 00:58:20,480
and you know, magically in two 
years, you know, these they've 

1163
00:58:20,480 --> 00:58:24,000
been marked up really well. 
That's been quite cynical, but 

1164
00:58:24,320 --> 00:58:27,400
you know, there is a little bit 
of wiggle room, you know, you 

1165
00:58:27,400 --> 00:58:30,920
could have there and you know, 
you could say, hey, My Portfolio

1166
00:58:30,920 --> 00:58:36,440
is, is sitting at, you know, a 
1.3 X mark to market today based

1167
00:58:36,440 --> 00:58:40,760
on my private company valuation.
So someone coming in. 

1168
00:58:40,760 --> 00:58:42,200
So actually that that looks 
great. 

1169
00:58:42,200 --> 00:58:44,560
I'll come into that fund or not 
even put some money into your 

1170
00:58:44,560 --> 00:58:45,960
next fund. 
This looks great. 

1171
00:58:45,960 --> 00:58:49,760
So there's, you know, the 
incentives are there for it to 

1172
00:58:49,760 --> 00:58:54,000
be a little bit abused. 
I think it it's tricky though. 

1173
00:58:54,000 --> 00:58:56,520
They generally genuinely are, 
you know, lots of private 

1174
00:58:56,520 --> 00:59:00,360
investments within these 
portfolios and you know, there 

1175
00:59:00,360 --> 00:59:04,000
is a bit of, you know, a bit of 
room to move on, on a lot of 

1176
00:59:04,000 --> 00:59:07,880
these things. 
And and you know, PE funds have 

1177
00:59:07,960 --> 00:59:12,440
got a lot of conviction for 
these things too, you know, so. 

1178
00:59:14,640 --> 00:59:16,200
There's there's a view out 
there. 

1179
00:59:16,200 --> 00:59:19,440
It's a view that like we've 
we've said before or parroted 

1180
00:59:19,440 --> 00:59:22,040
and it's even a view that we've 
we've heard from like, you know,

1181
00:59:22,640 --> 00:59:24,560
massive, massive capital 
allocators as well. 

1182
00:59:25,480 --> 00:59:29,240
And that's the private, like 
private equity mining just 

1183
00:59:29,240 --> 00:59:31,080
doesn't quite work. 
Like the, you know, there's, 

1184
00:59:31,520 --> 00:59:34,360
there's a floor in the, in the, 
in the funding model of the 

1185
00:59:34,360 --> 00:59:36,120
returns don't quite kind of get 
there. 

1186
00:59:36,480 --> 00:59:42,280
Do you disagree with that take? 
Yeah, I look, I would say, you 

1187
00:59:42,280 --> 00:59:45,440
know, there's pros and cons to, 
you know, this asset class and 

1188
00:59:45,440 --> 00:59:50,120
product, you know, in in the 
context of this industry, does 

1189
00:59:50,120 --> 00:59:53,880
it provide capital to projects 
that wouldn't have otherwise be 

1190
00:59:53,880 --> 00:59:56,240
funded? 
Yes, I would say some of these, 

1191
00:59:56,320 --> 01:00:00,440
you know, niche industrial 
minerals, you know, good quality

1192
01:00:00,440 --> 01:00:03,360
projects in far-flung places, 
you probably couldn't raise 

1193
01:00:03,360 --> 01:00:06,280
capital to build them. 
Without, you know, capital 

1194
01:00:06,280 --> 01:00:09,040
coming from PE. 
So yeah, is there on the balance

1195
01:00:09,040 --> 01:00:12,480
more projects built, more supply
because of it? 

1196
01:00:12,760 --> 01:00:16,360
I'd say yes. 
However, you know, there is, you

1197
01:00:16,360 --> 01:00:19,800
know, there's a lot of leakage 
in the model for investors that 

1198
01:00:19,800 --> 01:00:22,160
go into it, you know, through 
management fees, performance 

1199
01:00:22,160 --> 01:00:23,960
fees. 
You know, it's still a really 

1200
01:00:23,960 --> 01:00:26,760
risky asset class. 
You know, you know, they're 

1201
01:00:26,800 --> 01:00:31,000
illiquid, generally illiquid 
investments and it, it is really

1202
01:00:31,000 --> 01:00:33,360
hard to, to find exits for these
things. 

1203
01:00:33,800 --> 01:00:36,960
You know, you might not get more
than one shot to get your exit 

1204
01:00:36,960 --> 01:00:39,560
on, you know, what might be, you
know, a few $100 million 

1205
01:00:39,560 --> 01:00:44,120
investment, you know, so still, 
it's not an easy game to play. 

1206
01:00:45,120 --> 01:00:48,160
There are some really good 
managers out there with a lot of

1207
01:00:48,160 --> 01:00:52,560
experience and you know who, 
who've learned how to navigate 

1208
01:00:52,560 --> 01:00:55,400
these and build sustainable 
platforms that that do it really

1209
01:00:55,400 --> 01:00:57,040
well. 
You know, when we talk about 

1210
01:00:57,040 --> 01:01:00,000
managers, I mean, you know, 
there's there's investment 

1211
01:01:00,000 --> 01:01:02,840
committees, there's, you know, a
deep amount of in house 

1212
01:01:02,840 --> 01:01:07,600
technical expertise. 
Yeah, there is a lot of of 

1213
01:01:07,600 --> 01:01:11,000
people behind the scenes, you 
know, thinking through, you 

1214
01:01:11,000 --> 01:01:13,560
know, what this might look like 
doing a lot of work very hands 

1215
01:01:13,560 --> 01:01:16,520
on in managing these 
investments, you know, through 

1216
01:01:16,520 --> 01:01:20,520
the way there. 
It's not, I think you know, a 

1217
01:01:20,520 --> 01:01:23,640
handful of people just, you 
know, pocketing a lot out of it.

1218
01:01:23,640 --> 01:01:27,800
There is some generally some 
heavy lifting to be done and and

1219
01:01:27,960 --> 01:01:30,680
that's why the the fees are 
there and there's incentives. 

1220
01:01:30,680 --> 01:01:34,920
But it could, yeah, it could. 
It's it's somewhat self-serving 

1221
01:01:34,920 --> 01:01:37,240
as well. 
If you were there and the 

1222
01:01:37,240 --> 01:01:39,840
capital's available and you're 
raised to all these funds, yes, 

1223
01:01:39,840 --> 01:01:48,520
you could have a lot of GNA. 
If you were like, if you were an

1224
01:01:48,520 --> 01:01:51,160
LP, for example, like is there a
type of strategy or something 

1225
01:01:51,160 --> 01:01:55,080
that you'd be like most most 
favourable to like having, 

1226
01:01:55,240 --> 01:01:58,520
having, you know, thought about 
the, the model as deeply as as 

1227
01:01:58,520 --> 01:02:00,200
you have? 
Do you think there there are 

1228
01:02:00,200 --> 01:02:03,160
some some models that are like 
more compelling than not? 

1229
01:02:03,600 --> 01:02:07,800
Yeah, definitely, definitely. 
I think partnering is really 

1230
01:02:07,800 --> 01:02:11,160
important. 
I think you know being the only 

1231
01:02:11,160 --> 01:02:14,120
source of capital and having a 
control equity position means 

1232
01:02:14,120 --> 01:02:18,800
you know if there is risks and 
you have to follow on fund it's 

1233
01:02:19,040 --> 01:02:21,360
you know that could that could 
bleed you pretty quick. 

1234
01:02:21,600 --> 01:02:24,800
So having you know one or two 
other you know groups in there 

1235
01:02:24,800 --> 01:02:27,280
that are aligned and that might 
actually be some other PE funds 

1236
01:02:27,280 --> 01:02:30,320
that you know you're just Co 
investing on similar terms in 

1237
01:02:30,320 --> 01:02:31,840
the same parts of the cap 
structure. 

1238
01:02:31,840 --> 01:02:33,560
So having. 
If we do that with Aussie Super,

1239
01:02:33,560 --> 01:02:36,200
sometimes it'd be a. 
Yeah, look, yeah, Aussie Super 

1240
01:02:36,200 --> 01:02:41,360
was in there on Pilgrim Minerals
and in Genesis to I think more 

1241
01:02:41,360 --> 01:02:44,480
on some other projects have been
financed where, you know, you 

1242
01:02:44,480 --> 01:02:47,880
see a whole group of PE funds 
there in similar parts of cap 

1243
01:02:47,880 --> 01:02:49,920
structure. 
So having some partners there 

1244
01:02:49,920 --> 01:02:53,520
and and maybe it's even a trader
there who has the off take, but 

1245
01:02:53,520 --> 01:02:56,280
it's also in similar parts of 
the capital structures. 

1246
01:02:56,280 --> 01:03:00,240
You, you know, someone who's 
also incentivized for the equity

1247
01:03:00,240 --> 01:03:02,160
to do well as well. 
They're not going to give you 

1248
01:03:02,160 --> 01:03:05,400
aggressive terms because they've
got a bit of equity too. 

1249
01:03:05,400 --> 01:03:09,640
So having just everyone aligned 
and and having the the capital 

1250
01:03:09,640 --> 01:03:12,840
providers relatively 
diversified, I think that makes 

1251
01:03:12,840 --> 01:03:15,720
a lot of sense. 
The, you know, the average, you 

1252
01:03:15,720 --> 01:03:18,600
know, capital cost to build a 
project has been increasing and 

1253
01:03:18,720 --> 01:03:21,400
will continue to capital 
intensities rising. 

1254
01:03:21,760 --> 01:03:23,840
You know, there's inflation in 
the sector as well. 

1255
01:03:23,840 --> 01:03:26,320
So the ticket size that a lot of
these funds, right, if they've 

1256
01:03:26,320 --> 01:03:29,120
got a billion dollar fund and 
they do, you know, 5 to 10 

1257
01:03:29,200 --> 01:03:31,760
investments, that can be a 
hundred $200 million checks. 

1258
01:03:31,760 --> 01:03:34,000
It's not enough to build these 
projects on their own anyway. 

1259
01:03:34,400 --> 01:03:37,040
So partnering up I think makes a
lot of sense. 

1260
01:03:37,360 --> 01:03:40,480
Keeping these things private 
through construction, I think 

1261
01:03:40,480 --> 01:03:42,720
makes a lot of sense. 
Construction ramp up's a really 

1262
01:03:42,720 --> 01:03:47,880
tricky time for a project. 
There's a lot of surprises, you 

1263
01:03:47,880 --> 01:03:50,080
know, they don't go smoothly. 
You know, there's a lot of 

1264
01:03:50,480 --> 01:03:52,040
people learning about the ore 
body. 

1265
01:03:52,040 --> 01:03:54,360
There's ore body knowledge, 
understanding, you know, the 

1266
01:03:54,360 --> 01:03:58,400
metallurgy, geometallurgy, the 
variations there and you know, 

1267
01:03:58,440 --> 01:04:00,840
how the plant performs, where 
there's the bottlenecking 

1268
01:04:00,840 --> 01:04:02,320
needed. 
You know, there's a lot of 

1269
01:04:02,320 --> 01:04:04,880
things to iron out. 
You know, if you didn't have to 

1270
01:04:04,880 --> 01:04:08,160
do quarterly updates, you know, 
I think that'd be a great thing 

1271
01:04:08,440 --> 01:04:12,160
as you can, you know, ramp up 
this properly, get it set up and

1272
01:04:12,160 --> 01:04:13,920
then take it to the public 
markets. 

1273
01:04:14,080 --> 01:04:19,160
I think that'd, that'd work 
great and that that would be a, 

1274
01:04:19,280 --> 01:04:21,960
a nice strategy. 
I think you couldn't do that for

1275
01:04:21,960 --> 01:04:24,240
your whole fund. 
Yeah, you don't want to take, 

1276
01:04:24,520 --> 01:04:26,680
you know, that sort of 
construction risk at the same 

1277
01:04:26,680 --> 01:04:28,480
time, you don't want to be 
building 2 projects at the same 

1278
01:04:28,480 --> 01:04:29,520
time. 
So you probably don't want more 

1279
01:04:29,520 --> 01:04:31,800
than half your portfolio in 
construction. 

1280
01:04:31,800 --> 01:04:34,800
So just having a a blended 
approach to, you know, in 

1281
01:04:34,800 --> 01:04:37,160
construction projects, but also 
finding these, you know, turn 

1282
01:04:37,160 --> 01:04:39,880
around opportunities, M&A 
opportunities, finding, you 

1283
01:04:39,880 --> 01:04:42,840
know, just great management 
teams you want it back and you 

1284
01:04:42,840 --> 01:04:47,520
know, corner stoning their next 
acquisition investment things. 

1285
01:04:47,560 --> 01:04:49,960
Having a really diversified 
rounded out approach. 

1286
01:04:49,960 --> 01:04:53,920
But yeah, mix of private 
investments in the fund would 

1287
01:04:53,920 --> 01:04:55,880
make a lot of sense. 
Partnering with other groups. 

1288
01:04:56,520 --> 01:04:59,160
Yeah, just having a small 
mounting construction, the rest 

1289
01:04:59,160 --> 01:05:03,200
in sort of operating strategies 
have a little bit more, you 

1290
01:05:03,200 --> 01:05:05,680
know, different kind of 
strategic drivers there. 

1291
01:05:06,680 --> 01:05:10,080
That would be a great fund if I 
was doing it. 

1292
01:05:11,160 --> 01:05:12,760
I'm with you there. 
I'm sure there's a lot of 

1293
01:05:12,760 --> 01:05:15,040
managers out there that would 
love to not quarterly report as 

1294
01:05:15,040 --> 01:05:16,520
well. 
I think that'd be helpful for 

1295
01:05:16,840 --> 01:05:18,640
for a lot of folks out there. 
And the fees would be a little 

1296
01:05:18,640 --> 01:05:20,600
bit different. 
I think I would keep it pretty 

1297
01:05:20,600 --> 01:05:23,960
lean. 
I think, you know, if you can 

1298
01:05:24,040 --> 01:05:27,160
raise sort of a billion dollar 
fund and you're making 510 

1299
01:05:27,160 --> 01:05:32,680
investments, you know, do you 
really need an enormous team to 

1300
01:05:32,680 --> 01:05:35,120
find opportunities? 
You know, I think that's 

1301
01:05:35,120 --> 01:05:37,800
probably an area where you can 
be very targeted in what you 

1302
01:05:37,800 --> 01:05:39,720
want to go after. 
So you don't need a huge amount 

1303
01:05:39,720 --> 01:05:43,520
of resources there managing it. 
Yes, you definitely need yeah, a

1304
01:05:43,720 --> 01:05:46,720
good team that to be involved 
with the portfolio companies 

1305
01:05:46,720 --> 01:05:50,160
there. 
But you know, do you need to do 

1306
01:05:50,160 --> 01:05:53,080
in house everything in terms of,
you know, finance, accounting, 

1307
01:05:53,080 --> 01:05:55,640
legal, maybe you can outsource a
lot of that and just run with a 

1308
01:05:55,640 --> 01:05:59,360
really lean headcount. 
Yeah, maybe that, that is model 

1309
01:05:59,360 --> 01:06:03,400
to have a really lean management
fee so you can keep a small, 

1310
01:06:03,400 --> 01:06:06,400
small team and yeah, weight it 
towards you know, your 

1311
01:06:06,400 --> 01:06:09,840
performance fee to really, you 
know, be incentivized. 

1312
01:06:10,200 --> 01:06:12,560
Yeah, that's a, that's a real 
point of difference with just 

1313
01:06:12,560 --> 01:06:15,840
out and out equity investors 
that the team size is a a huge 

1314
01:06:15,840 --> 01:06:18,360
point of difference. 
Fraser, this has been 

1315
01:06:18,360 --> 01:06:20,640
spectacular mate. 
I've really enjoyed learning all

1316
01:06:20,640 --> 01:06:22,880
about the, the PE world and I'm 
sure all the money miners have 

1317
01:06:22,880 --> 01:06:24,520
as well. 
So thank you for coming and and 

1318
01:06:24,520 --> 01:06:25,720
sharing all your wisdom with us 
mate. 

1319
01:06:26,400 --> 01:06:28,080
Thank you. 
Just just a few gems. 

1320
01:06:28,920 --> 01:06:31,600
Mate, that was, that was unreal.
A massive thank you to our 

1321
01:06:31,600 --> 01:06:34,920
wicked partners, Sandy Ground 
Support, Intralinks. 

1322
01:06:34,920 --> 01:06:36,920
Check them out. 
Focus the platform by market 

1323
01:06:36,920 --> 01:06:38,360
tech. 
You should do it over my 

1324
01:06:38,360 --> 01:06:41,280
shoulder most times. 
We've also got a big thank you 

1325
01:06:41,280 --> 01:06:44,600
to make to exceed capital and 
last but not least, switch 

1326
01:06:44,600 --> 01:06:46,800
technologies. 
Check out our local engineers 

1327
01:06:46,880 --> 01:06:49,840
right here in Northridge, mate. 
Budry money manas budduru. 

1328
01:06:51,320 --> 01:06:54,160
Now remember, I'm an idiot. 
JD is an idiot. 

1329
01:06:54,480 --> 01:06:56,600
If you thought any of this was 
anything other than 

1330
01:06:56,600 --> 01:06:59,280
entertainment, you're an idiot 
and you need to read out a 

1331
01:06:59,280 --> 01:06:59,720
disclaimer.